
UNIVERSITY OF OKLAHOMA 
BULLETIN 



GOVERNMENT PRICE CONTROL 




Issued Semi-Monthly By 

THE UNIVERSITY OF OKLAHOMA 

Norman, Oklahoma 

NEW SERIES NO. 204 EXTENSION NO. 

JULY 15, 1920 



59 






3^ 



FOREWORD 

(iuvtrnnient price-control is an exceedingly difficult problem. 
1 1 might be plausibly argued that only traind economists should 
attempt to discuss it. But it affects the life of all the people so 
greatly and so vitally that e\en the unletterd masses will not be 
content to let others decide. One of the greatest problems of de- 
mocracy arises from the fact that the masses of the people must 
often decide questions about which they are inadequately informd. 
It were to the last degree absurd to claim any infallibility for 
popular decisions. We have simply learnd that the masses, with 
all their ignorance and follies, are better to be trusted than the 
one-sided decisions of selfish classes, oligarchies, or autocrats. 

The hope of democracy, then, lies in our efforts to render the 
oj)inions of the masses of the people more intelligent, just, and 
wise. It might easily be argued that the subi^ct of government 
price-control is too difficult even for the economists. But it is 
a question which the people will and must discuss anyway. Both 
educational policy and patriotism require that we do all that can 
I)e done to make their discussion enlightend, candid, fair, com- 
petent. This is the aim of this bulletin. Least of all is its pur- 
pose to advocate any view or policy whatever. Quotations are 
made from holders of all views so far as limited space permits, 
and the chief opinions are represented as far as possible. 

As often urged before in these debate bulletins, the aim of 
the debater should not lie merely to win a decision but to learn 
the utmost about the question and reach the sanest conclusions ; 
and especially to avoid becoming a partizan for either side of a 
question, at least until all the facts and arguments for the other 
side are fully known and duly considered. 
University of Oklahoma J. W. Scroggs 

Sept. 1920. Department of Public Discussion and Debate 

SOME SUGGESTED TOPICS 

The Need for Price-Control 

Lessons from the History of Price-Control 

justice and Expediency of Price-Control 

Difficulties of Government Price-Control 

Competition and Fair Prices 

Working of the Laws of Supply and Demand 

Effects of Monopoly and Combination on Prices 

Importance of Prices in Human Life 

Bulls and Bears as Price-Makers 

Catching the Profiteer 



'Cxr^D 



UNIVERSITY OF OKLAHOMA 
BULLETIN 



QUESTION 

Sliall the policy of Government Price-Control W adopted in tlie 

United States 

Facts and Ar"uments on Both Sides 



J. W. Scruggs, Editor 

EXTENSION DIVISION 

DEPARTMENT OF PUBLIC DISCUSSION AND DEBATE 






PRICE CONTROL 
Dr. T. B. Robb, University of Oklahoma 

I. GENERAL CONSIDERATIONS 
Price Control. Prices may be controld both directly and 
indirectly. They ma}^ be fixt by legal enactment; or by a board 
or commission, created by law, to eflfect the same purpose. Such 
a board or commission, might not have any legal power to fix 
prices and yet deliberateh' exercise great control over prices by 
crystalizing public sentiment behind their recommendations. 
During the war, the Fuel Administration had no legal power to 
fix prices. The only control the Food Administration had over 
prices was through its licensing power, while the legal position of 
the Price-Fixing Committee of the War Industries Board was. 
according to Professor Taussig, a member, "highly uncertain." 
yet all of these agencies directly controld prices. 

But it is possibe to control prices, to a certain extent at least, 
in a more indirect way. If the price of wheat is fixt, this action 
will certainly control somewhat the price of flour and thus the 
price of bread. If the price of cattle were fixt, it would affect 
the price of hides and this would affect the price of shoes, and 
the price of shoes helps materially to determine the cost of living, 
and the cost of living is probably the most potent factor which 
determines wages. Thus, the fixing of the price of things like 
wheat and meat indirectly exercises some control over many 
other things. 

Difficulties of the Question. The students will soon dis- 
cover that price control is one of the most subtle and elusive 
subjects with which economic science has to deal. This fact should 
be borne in mind in discussing the question. The factors which 
determine prices are so numerous and complicated and unseen 
that few people are able to visualize the process and see just how 
prices are determind. For this reason, the debater should be ex- 
tremely cautious about taking some one fact or group of facts, 
which he happens to see, and then jump to the conclusion that 
these things determine prices. He will also run against many 
anom.alous and apparently contradictory facts, but these he must 
be prepared to expect. 



4 THE UNIVERSITY OF OKLAHOMA 

II. MARKET MACHINERY 
Meaning of Price Control. The first essential in the dis- 
cussion of the question is to s^ct something concrete and definite 
out of the phrase "price control". We know that goods, as a 
rule, travel a long journey in their passage from the producer to 
the consumer. It is also well known that at each station of this 
journey goods sell at a different price. Consequently, when we 
talk of "price control", what prices do we mean? Before this 
question can be answered, we must take a look at the machinery 
of the market. By market machinery is meant that process 
liirough which goods pass on their way from the producer to the 
tinal consumers. This process differs somewhat for different 
classes of goods, l)ut the marketing of food products is typical 
of the general situation. Professor Weld, in his admirable book 
(in the marketing of farm products, gives the following descriptif<n 
<if tliis marketing macliinery : 

The Marketing Process. "Ordinarily, the marketing process 
may be divided roughly into four successive steps, viz : country 
shippers, transportation companies, wholesale dealers, and retail 
stores. In passing through the wholesale trade, there may be two 
or three successive middlemen ; such as commission men or job- 
l)ers ; or a broker and a jobber, or a broker, an auction company, 
and a jobber. The cold storage warehouse may enter as an ad- 
ditional middleman, or a drayman may enter between the rail- 
road company and commission men, or between the wholesaler 
and cold storage plant. 

Marketing A Manifestation of the Division of Labor. "It 
will l)e remembered that marketing is a part of production. 
Specialization into successive steps is a form of division of labor 
and division of labor is commonly praisd as a phenomenon that 
reduces the cost of production, or that makes possible the prcv 
duction of a greater amount of wealth with the same amount of 
effort. W"e praise division of labor in the packing plant, whereby 
each workman performs a single task and becomes an expert at 
that task. We also praise that form of specialization, whereby 
the manufacturing process is sul>dividcd among separate plants. 
In the steel industry, for example, one plant makes nothing but 
pig iron, another makes pig iron into crude steel ; another rolls 
the steel into bars ; another takes the bars and makes structural 
forms, or machinery. In the worsted industry, the tendency is 
towards a greater sub-division of tasks among separate plants. 

Marketing Machinery Should Reduce Prices. "It is difficult 
to understand why tliis division of labor or specialization argu- 
ment should not ai)ply to the marketing part of production as well 
as the manufacturing part. Tkose who have really made a first 
hand intensive study of the wholesale produce trade realize that 
there are certain necessary functions to be pcrformd and that 
these functions are much more ditificult and complex than is com- 
monly supposed. Each successive middleman specializes on one 



GOVERNiMENT PRICE CONTROL 5 

particular set of functions. For example, in New York City, a 
large part of the butter reaching that city passes thru the 
hands of two different middlemen before reaching the retail 
stores. The first is a whole-sale receiver who receives l)Utter 
in large quantities and in great variety from a large number of 
country creameries. He sends out solicitors to get m touch with 
the creameries, and he often finances them by allowing them to 
draw drafts on day of shipment. He provides a store or ware- 
house with adequate refrigeration, assembles the miscellaneous 
shipments from different parts of the country, weighs them, and 
makes returns to shippers and sorts them out roughly, according 
to quality. These functions of the receiver form a business in 
themselves. He sells in lots of from twenty to fifty or more 
tubs to jobbers, who, in turn, send salesmen to the thousands of 
retail stores, delicatessens, restaurants, hotels, etc., and delivers 
one tul) at a time from day to day as the needs of the retail out- 
lets demand. 

Conclusions to Draw. The purpose of this rather lengthy 

quotation is to .show the following: (1) that the marketing pro- 
cess is a part of production, and (2) that the various steps in 
this process, namely the transportation coi.ipanies, whole- 
salers, retailers, etc., are simply a case of the division of labor, 
(3) that the division of labor, as we know it in manufacturing, 
has been a great boon to society, for it has greatly increast the 
productivity of labor and thereby reduced prices to the con- 
suming public. The conclusion is that the presumption is in favor 
of this market machinery, for the specialization it .shows indi- 
cates high productivity of labor and hence lower orices to con- 
sumers. This is not saying that the present market machinery 
is perfect. It may be that the specialization has been overdone. 
But this phase of the subject has no relation to the question of 
price control ; and is consequently beyond the purview of this 
article. We pass now to a consideration of what this marketing 
process costs the consumer. 

III. THE COSTS OF MARKETING 
Where Prices Can Be Controld. We have seen that food 
products in a general way pass through the hands of country 
shippers, transportation companies wholesale dealers, and retail 
stores. Food products sell for a different price at each of these 
•^.taf^es. It is evident that price control will have to control the 
price at some or all of these given points. Let us consider how 
much of the consumer's dollar is consumed at each of these points. 
Citrus Fruit. G. H. Powell, in an address before the West- 
ern Fruit Jobbers' Association, in April, 1915, gave the following 
figures for fruit: 

"Taking the thirty re])resentative citrus markets, including 



6 THE UNIVERSITY OF OKLAHOMA 

5,483 rei)orts extending over the year 1914, the <r..stril)ution of the 
consumer's dollar is as follows: 36.5 per cent of it is returned to 
the grower in California, of which 9.8 per cent represents the 
proportion alloted to picking, hauling, and packing ; 20.5 per cent 
represents the allotment to transportation; 1.5 per cent the 
grower's cost of selling the jobber, and 41.5 per cent the propor- 
tion represented Ijv the jobliing and retail gross distril)uting costs, 
the latter representing four times as much as the former." 

"The Spread." The difference between what the producer 
gets for his article and what the final consumer pays is calld the 
"spread". We can get nowhere in a discussion of price control 
without knowing what part of this "spread" is alisorbd by each 
of the various parts of the market machinery. The following 
statistics are given in order to show the elements of this "spread" 
for a few of the standard products. These statistics are taken 
from Weld's "The Marketing of Farm Products", and the source 
from which he procured the figures will be given wherever pos- 
sible. 

Cost of Marketing Butter. The following figures show the 
cost of marketing Minnesota creamery butter in New York City. 

Cents per per cent of 
pound retail price 

Received by farmer for butter fat 

Cost of manufacture in creamery 

Freight to New York and Cartage 

Wholesale receiver 

Jobber 

The Cost of Marketing Wheat. "The cost of marketing 

wheat from a local sliippiiig point in Kansas to Pliiladelpliia, via 

Kansas City, Missouri, is .shown by tiie following figures: 

Cents per bushel 

Price received by farmer in Kansas 87.0 

Margin taken by country elevator 3.0 

Freight rate to Kansas City 6.2 

Inspection, weighing, and interest on draft .25 

Commission 1.0 

Price paid by shipper in Kansas City 97.45 

Freight rate, Kansas City to Philadelphia 15.6 

Mixing in Kansas City elevator .25 

Exchange -20 

Over head expense of shipper .375 

Net profit of shipper .625 

Price deliverd in Philadelphia 114.500 



25.0 


()9A 


2.5 


6.9 


1.5 


4.2 


.5 


1.4 


1.5 


4.2 


36.0 


100.0 



GOVERNMENT PRICE CONTROL 7 

Cost of Marketing Beef. In view of the widespread public 
interest in the meat packing industry, the following quotation 
is given from Weld's l)ook to show the facts in this husmess. 
"Spread for Beef. "The principal element in the gross 
spread between farm price of stock and retail price of meat is due 
to the fact that the carcass of the slaughterd animal contributes 
such a relatively small proportion of the weight of the live animal. 
Ahho lietter results are obtaind from high grade animals, the 
average weight of beef carcasses slaughterd at South Saint Paul, 
,,ne (if the large markets of the country, is only 51 per cent <.t 
the live weight." In other words, "the dressing per cent" is 5i. 
For hogs, it is 11 and for sheep, 47. It is apparent that the ori- 
ginal cost of the live steer of, say one thousand pounds, must be 
distributed over only 510 pounds of meat, except the returns 
from by-products which come out of the other 490 pounds. But 
thtse by-products are much smaller value than the carcass. As 
a matter of fact, it has been found that in 1913, the average 
price paid for a thousand potmd steer, at South St. Paul, was 
$62.50: that the packer sold the carcass for $58.65, or less than he 
paid for the live animal, and the by-products for $15.06 or a 
total of $73.71, yielding the packer a gross margin of $11.21, out 
of which he had to pay for maintenance and operation of pack- 
ing plant, freight to distributing points, and maintenance and 
operation of l)ranch houses. 

Ratio of Profit to Sales. "It is difficult to say just what 
proportion of this $11.21 was taken up by the packers' expenses 
and how much he was able to retain as profit but Swift and 
Company in its annual report for 1912 gives the following analy- 
sis of one dollar in sales : 

For live stock $0.80 

For labor • _ 

For freight ^^ 

For other expenses 
For profit •*^"^ 



Total 



1.00 



Packers' Profit Per Pound. "If these figures are correct, 

the packing plant retains only about $2.20 as net profit out of 
its totalmai-gin of $11.21 on a thousand pound steer. This profit 
would amount to about 40 cents per hundred pounds of meat, or 
to about 2-5 cents a pound. This figure is higher than that of 
the United States Bureau of Corporations in its report on the 
beef industry of 1915, which found that the average profit of three 



8 THE UNIVERSITY OF OKLAHOMA 

of the largest packers in the country was 13.1 cents per hundred 
pounds of drest meat in 1S02 to 1903 and 13.5 cents from 1903 
to 1904, or a little over one-tenth of a cent per pound. These 
computations are all based on the value of crude by-products 
and ddes not take into account the profits derived from manu- 
facturing these by-products into a tliousand and one useful com- 
modities. Even where tliese profits are included, the Bureau of 
Corporations found that the average net profit of the packers was 
not over 25 cents per hundred pounds of drest beef, or one 
fourtli of a cent per pound. From these figures, it is perfectly 
safe to conclude that the net profit per pound of l)eef taken 1)y 
the packer is an unimportant item of the spread between producer 
and consumer, and that he makes his return on capital invested 
by doing an enormous volume of business. 

Margin Taken by Retail Butcher. "It has been shown above 
from computations made in Minnesota that, in 1913, the packer 
at South St. Paul paid on the average $62.50 for a thousand 
pound steer, and that he sold the carcass to the retail butcher for 
an average of $58.65. It remains now to see how much the re- 
tailer sold this carcass for to consumers. 

"It will be observed that, in the case of the beef carcass, the 
rib, loin, and the round, the three best cuts, constitute only 51 
per cent of the total weight. In spite of the relatively high prices 
charged for these cuts, the average price for the whole carcass 
was but 16.5 cents. The average price paid for the whole car- 
cass was 11.5 cents, or to return to the thousand pound steer 
bases, the retailer paid $58.65 for the carcass, and sold it for 
$84.20 to the consumer, a gross margin of $25.55 or 30.3 per cent 
of the selling price (or 43.56 per cent of the cost). Reports se- 
cured from retail l)utcher shops in the Twin Cities indicate that 
the cost of doing business is about 24 or 25 per cent on mutton. 
Surely the retail butcher is not making a fortune and, yet, the mar- 
gin that he takes out is far and away the largest slice taken out 
in the marketing chain. The costs of retailing are high ; ex- 
penses for delivery alone constitute about one-sixtli of tlie total." 

IV. CONCLUSIONS REGARDING COST OF 
MARKETING 
Controlling the Middleman's profit: The significant thing 
about the al)ove figures is tlie large proportion of the retail 
price the original producer and retailer get, and what a small per 
centage the other middlemen get. In the case of butter, if it were 
possible to al)olish altogether tlie commission received by the 



GOVERNMENT PRICE CONTROL 9 

wholesale receiver and the jol)l)er, it would reduce the price of 
butter only about two cents per pound. In the case of eggs, it 
would he less than two cents per dozen. Of course no one con- 
tends that the wholesaler and jobber in these two lines could be 
abolisht. But, if the prices they chargd, were regulated so as to 
give them just sufficient to pay their necessary expenses without 
any profit, the reduction would be so small that the consumer 
would probably never know the diflference. 

Wheat. Agitators and demagogs tell us of the abuses of 
the wluat pit in Chicago and how the speculators and other man- 
ipulators set the price of the farmer's wheat; yet, if we take 
Kansas wheat selling in Philadelphia, we find that the amount 
the Kansas farmer gets for his wheat and the freight rate to 
Philadelphia constitute almost 95 per cent of the selling price of 
the wheat in Philadelphia. On the other hand, the margin taken 
by the country elevator, the charge for inspection, weighing, in- 
terest, mixing in Kansas City, margin of commission man in Kan- 
sas City, exchange, overhead expense of shipper and the net pro- 
fit of the shipper combined, make only slightly over 5 per cent 
of the selling price of the wlieat in Philadelphia. Let it be under- 
stood that no attempt is being made to justify the charges which 
constitute this 5 per cent; what we are trying to do is to show 
what a small margin there is for the exercise of jirice conrol at 
any of these places. 

Beef. If the price of beef at the packing house were re- 
gulated so as to take away all the profit of the packer, the price 
of beef to the consumer would be lowerd less than 1-2 cent per 
pound. 

Where, Then, is the Trouble? Weld answers this question 
as follows ; "By far the most expensive step in the marketing 
process is ll;c retaH. store. From numerous instances of costs 
of marketing different commodities cited in Carver's "Rural Eco- 
nomics", it lias been roughly computed that on the average the 
retailer takes about 47 per cent -of the spread between farmer and 
consumer. In other words, the retail store takes a slice nearly as 
large as tlie sl.ccs taken ly the country shipper, tran.sportation 
coirpiny, and wholesaler and jobber combined. The marketing 
proi)lem is largely a problem of reta'.l merchandising. And yet 
the v..de margin taken l)y retailers is not due to any greater pro- 
fits accru'ng to tiiat clas.-. of middlemen: rather, it is due to the 
high expenses of retailing.'' 

V. AGITATION FOR PRICE CONTROL 

The foregoing statement of conditions represents the normal 
condition of peace, but for five years the v,'orld has not been in 
a normal condition of peace, and it is uncertn'n when we can ex- 



10 THE UNIVERSITY OF OKLAHOMA 

pcct those conditions to !)econu' normal. Constantly, nunintint; 
war prices have ruled now for five years, and under such a condi- 
tion of soaring prices, grave ahuses may he practist. This con- 
dition necessitated regulation of prices during the war. .\n(i 
there is much agitation for continued regulation on into the in- 
definite future. Let us consider why prices rose during the war, 
why they have continued to rise after the close of the war, and 
the ahuses tliat may exist under such conditions. 

Causes of War Prices. Our best authorities seem pretty 
well agreed that war prices were the result of two general 
causes ; first, the shortage of supplies coupld with a hysterical 
demand for them, plus competitive bidding, and, second, the in- 
llation of money and credit, due to war finance. The first con- 
dition is well stated by Professor Taussig: 

Hysterical Competitive Bidding. "When government pur- 
chases are on such a scale as to absorb a very large proportion of 
the available stock or accuring output, the ordinary formulae of 
supply and demand are no longer applicable. When a govern- 
ment l)uys for war purposes, it is desperately determind to secure 
what it needs, irrespective of price. To put the case in technical 
terms, demand is virtually inelastic; the demand curve is almost 
perpendicular ; there is no such thing as a determinate equli!)rium 
price. This is the explanation of the soaring prices, the wide 
and al)rupt fluctuations, the speculative shifts, the quick response 
to rumors of government policy. The tendency to a runaway 
and unpredictal)le market becomes still more markt if there hap- 
pens to be several government agencies bidding against each 
other. Such v.as the situation when the representatives of the 
l)elligerent allies bought wheat in the American market in the 
spring of 1917. The munition contracts were so profitable that 
the makers were almost indifferent to the prices, it was profitable 
and imperative to secure the needed materials." 

Influence of Inflation. Most authorities are agreed that 
prices rise as the currency is expanded. The reason for this is 
as follows: The most important function of money is that of a 
go-between wlun gootls are bought and sold. At any one time, 
there is so much money in circulation. At the same time, there 
arc so many business transactions; that is purchases, sales, etc. 
Since money is a go-between in these purchases and sales, it is 
evident that, at this time tlie money in circulation has a certain 
definite amount of work it had to do. Should the amount of 
money increase, while the amount of work it had to do remaind 
the same, each dollar would have that much less work to do ; its 
ability to command articles would lie that much less, or, in other 
words, its purchasing power had fallen. When the purchasing 
power of the dollar falls, it means tlie prices ha\e risen. Let us 



GOVERNMENT PRICE CONTROL 11 

now look and see how the currencj^ of the world has expanded 
during the war. Mr. O. P. Austin, statistician of the National 
City Bank of New York, is quoted as follows : in Commerce and 
Finance of August, 27, 1919. 

Increase of Paper Money. "I wonder if we fully realize 
the quantity of paper money which the responsibile governments 
of the world have put afloat since the lieginning of the war? 
THIRTY SIX BILLION DOLLARS! The paper money in ex- 
istence in the fifteen principal countries of the world at the l)egin- 
ning of the war was less than $8,0C'0.000,000.00 and at the end 
of the war. it was over $44,000.000,CCO.CO. an increase of $36,- 
000,C0O,COO.CO worth of paper currency not including that issued 
by the Bolsheviki in Russia. 

"Vve have been inclined to charge up the advance in prices 
occuring prior to the war to the fact that $8,000,000,000.00 worth 
of gold was turned out by the mines of the world in the twenty 
years following our famous gold and silver campaign of 1895. 
But here are $36,000,000,000.00 worth of paper promises to pay 
tu'-ned out as legal tender money l)y fifteen responsible govern- 
ments in a short four year period. 

The Magnitude of This. "Do we realize how va.it a sum is 
this $3;),0OO,G0O,l'00.CO worth of paper currency which has been put 
into circulation in such a brief time? It is more, in its face 
value than all the gold and silver turnd out by all the mines of the 
428 years since the discovery of America." 

increase of Bank Deposits. In addition to this paper 

money, Mr. Austin points out the well-known fact that the bank 
deposits of the fifteen principal countries of the world have in- 
creased from about $25,000,000,000.00 in 1913 to $75,000,000,000.00. 
These $50,0C0,000,CC0.00 of additional deposits have affected prices 
the same as money, for the checks drawn against these deposits 
do the same work as money. 

Effect of Bond Issues. Finally, Mr. Austin calls attention 
to the third form of inflation : "In addition to vast sums of 
legal tender currtrcy turned out by fifteen responsible countries 
of the world, these governments have, at the same time, made an 
even more spectacular advance in their issue of another series of 
promises to pay, which, while not legal tender in the ordinary 
sense of the term, do form a mc^re slowly moving mass of cur- 
rency. By this I mean the $180,000,000,000.00 worth of bonds or 
ether forms of national obligations, issued by the governments of 
the v.-orld in the past four years, for the national debts of the 
world, have advanced from $40,000,000.0(0.00 at the beginning of 
the v/ar to $220.009.000 000.03 at its close. And. while these bonds, 
or other governmerl promises to pay money at some future 
date, are not legal tender in the ordinary sense of the term, they 
do pass current in the financial world and prove a basis upon 
which money may be readily obtaind !-\ their holders, and to this 
extent are an addition to the world's circulating medium." 

Effect on Prices. Bringing these figures together, we find 



12 THE UNIVERSITY OF OKLAHOMA 

that the world's supply of paper money has increast about five 
times since the beginning of the war ; that the bank deposits have 
increast three times, and government bonds more than five times. 
It is not to lie wondered at that prices are high. The miracle is 
that they are as low as they are. This is what the Nation meant 
when it said recently that the cause of the high cost of living 
was economic, not personal. The student should study carefully 
these causes of high prices in order that he may be on his guard 
when uninformd people say that high prices are due to manipu- 
lators. Manipulators and spectulators have undoubtedly playd a 
part, as w'iil lie shown later, but we must realize that it has been 
a minor part. 

Why Prices Continue to Rise. But it may be asked "Why 
do prices continue to rise after the close of the war?" Does 
not this phenomenon prove that the factors, just discust, are not 
the fundamental ones in the case? In answer to this question, at- 
tention is calld to the fact that, since the signing of the armistice, 
the i;aper currency of the world has been further expanded to the 
amount of $6,000,000,000.00 and more than $.30,000,000,000.00 ad- 
ditional bonds have i)cen issued. This process of inflation is still 
going on apace and no one can tell how long it will continue. 
The after war expenses of the chief, belligerents are proving so 
high that few of them are being able to pay these peace expenses 
as they go, but are having to resort to currency expansion or 
what Theodore H. Price calls the "Anesthesia of Inflation." In 
1913. the tax payers of the United Kingdom groand under the 
burden of the national budget of that year, but the budget for 
next year will be about six times what it was in 1913. It seems 
to be the opinion of the best authorities that substantially lower 
l)rices are nowhere in sight. 

Speculators and War Prices. Elaborate figures have already 
been given to show that the part of the spread between the pro- 
ducer and the consumer, taken l)y wholesalers and jobbers, is 
very much smaller than is generally realized. These parties often 
become exceedingly prosperous, but it is not l)y taking a big slice 
off each unit that passes through their hands; rather, it is due to 
a moderate slice on each i>f the huge number oi units wliich 
they handle. 

In Abnormal Periods. But in a period of shortage of sup- 
plies and rapidly mounting prices, speculators do a thriving I)usi- 
ness because of fluctuations. By buying up supplies and holding 
them out i>f the market, the .shortage is accentuated, and this 
fictitiun-- "-ItMrtriije is a vtr}' potent factor in furtlier boosting 



GOVERNMENT PRICE CONTROL 13 

prices. But extreme caution must be exercised at this point. If 
we admit that buying up supplies and holding them out of the 
market will boost prices, we ought to be consistent, to admit that 
later when these goods are thrown on to the market, as of course 
they must, the effect would be to depress the prices. Consquently 
our best authorities on speculation refuse to get excited regard- 
ing the effect of speculators on prices, for, to be a speculator, you 
must both buy and sell and, while the buying may tend to raise 
prices, the selling must tend to depress them. You can't lift 
yourself by your bootstraps, for, as you lift yourself up, so also 
do you pull yourself down. 

When This Won't Hold. But this condition can hardly be 
said to hold in war time, especially in the case of certain arti- 
cles of which the government is the principal buyer. When the 
government is hysterically buying up most of the available supply 
of a given commodity at any price, in its effort to arm itself at 
the quickest possible moment, the ordinary formulae of supply and 
demand, as Professor Taussig says, are no longer applicable, and 
there is no such thing as a determinate equilibrium price. In 
such a case, speculation and hoarding are certainly vicious, for 
since there is hardly such a thing as supply and demand coming 
into equilibrium, the speculator when he buys up, does not have 
a countervailng effect on the other side of the market when he 
sells. Not only was this the condition during the war, Init in the 
case of certain articles it will a!s(i probably last sometime into the 
future, in such a chaotic condition has Jthe world been left. When 
this condition ol;lains, there is little effective argument against 
government price regulation. 

The War as a Millionaire Maker. We see the statement 
almost daily of the number of millionaires which the war has 
made. This statement is intended as prima facie evidence of pro- 
fiteering and, therefore, justification for price control. The 
trouble w-ith this statement is the fact that it does not take into 
consideration the currency inflation caused by the war. An ex- 
treme example will show the trouble. During the Revolutionary 
war, continental currency depreciated to such an extent that it is 
said that barbers papered their shops with it. If a man bad a 
million dollars worth of this currency, he was a millionaire! 
We have given figures to show the inflation of the currency 
since the beginning of the war. The only significance of money 
is its alnlity tu command articks whicii we desire. War finance 
has so knockt the purchasing power out of the dollar that it is 
douittful if a dollar today will command on the average, more 



14 THE UNIVERSITY OF OKLAHOMA 

than 4U cents would in 1914. Consequently, we say lliat, if a man 
had a yearly salary of $1,000.00 in 1914, he ought to have at least 
$2,000.00 now to be in the same relative position. In the same 
way, if a manufacturer in 1914 had a legitimate income of $400,- 
000.00 a year, can we say that he is profiteering, if he gets $1,000.- 
000.00 now? There is an old adage to the effect that when money 
comes in the door, reason flies out the window and if we want to 
know whether the war made millionaires, we must compare the 
purchasing power of his income with that of 1914, for it is the 
1914 conception of a millionaire that is projected into the present. 
The way to test this matter would Ijc to consult price index 
numbers to measure the inflation of the dollar. If prices have 
doubled on the average, then we should take the Federal Income 
tax statistics, and compare the number who are getting a year- 
ly income of $1,0C0C00.00 or m.ore. at present, with the number 
who got $500,0G0.C0 or more, in 1914. 

VI. OTHER ARGUMENTS FOR PRICE CONTROL 

Price Control and Monopoly. Where free competition ex- 
ists, the law of supply and demand is an effective protection to 
the public. But, under a condition of monopoly or a tendency 
to monopoly, governmental control is imperative and so far the 
most effective control has been some species of price regulation. 
Let us consider the prevalence of monopoly and what program 
the government must adopt in order to grapple with the problem. 

Law of Decreasing Cost. In the realm of what is com- 
monly called "big business" there is an irresistible tendency to 
monopoly. This irresistible tendency to mouopoly is due to capi- 
talistic industry resulting in the law of decreasing cost of produc- 
tion. Industry is called "capitalistic" when a huge initial invest- 
ment of capital is necessary before productioil can begin and it 
is this large initial investment of capital that results in the law 
(•)f decreasing cost of production. In explaining this situation, 
the writer v.'ill make use of a few of his paragraphs in a recent 
University of Oklahoma Inilletin on Government Ownership. 

"The modern shoe factory is a gt)od example of the law of 
decreasing cost. Shoes are now made in large .'ictorios where 
there is very expensive specialized machinery operated by highly 
skilled labor. If this factory could sell but one shoe a year, it is 
evident that this shce w-nild have to bear the total expenses of 
the \vheile factory. Under such conditions, shoes would be .so 
expensive that even m.illionaires could scarcely afford to wear 
them. Eut this factory could make ten thousand shoes in a year 
with little more cost than is necessary to make one if it could 
onlv find a n':arl;(t for llum. In such an event, shoes would be 



GOVERNMENT PRICE CONTROL 15 

made much cheaper, because the overhead costs of the factory 
are divided among ten thousand shoes instead of beiiig borne by 
one. In the same way, if the firm could sell a million shoos a 
year, it could produce each shoe at a lower cost. In short, thv 
more shoes the factory can find a market for, the cheaper it can 
make each successive shoe, for the overhead charges representing 
the cost of the large initial investment of capital are divided 
among an ever increasing number of shoes.'' 

Why It Tends To Monopoly. Competition among firms 
working under this law is an unstable competition for as the cost 
of production always has a tendency to fall with every change in 
cost, the plane of competition must change. Every firm is ever 
.straining to enlarge its market, for as its market widens, its out- 
!)ut can increase and with each increase in output, its cost of pro- 
duction decreases. Any decrease in cost of production gives the 
firm a relative advantage over its competitors and further streng- 
thens its position in shoving them out of the market. This is 
what is known as "cut-throat" competition. It is competition 
not primarily for the purpose, of reducing the cost to the con- 
sumer, but competiton for the purpose of freezing out a com- 
petitor in order to get his business. 

How It Results. The tendency of this condition is to 
monopoly. Monopoly comes from this situation in one of two 
ways. If one competitor is stronger than the other, its larger 
market makes it possible to produce cheaper than its competitors 
and consequently it can go into their market, undersell them, and 
gradually kill them off. As this process continues, the strength 
of the surviving concern increases with accelerated rapidity and 
soon it controls the whole field. This is the way the Standard 
Oil Company rose to power. If the competing concerns are of 
nearly equal strength, as they compete for each other's markets, 
the cutthroat competition reduces the strength of all. No one is 
able to freeze out his competitor, but they all see that the policy 
they are pursuing is commercial suicide. The inevitable result of 
this is that, after a period of futile struggles, they bury the hatchet 
and combine, thus eliminating competition. In part, this was the 
condition immediately preceding the formation of the United 
States Steel Corporation. The essential thing to remember is that 
there can l)e no such thing as stable competition among concerns 
working under the law of decreasing cost, and that "cutthroat" 
competition, which is another name for this unstable competition, 
has a strong tendency to reduce monopoly. This is the key to the 
explanation of the marvelous rise of the "trust" and "big busi- 
ness" movement of the last thirty years. 



16 THE UNIVERSITY OF OKLAHOMA 

Wc must rcmtmhcr tliat we are just in tlie initial stages of 
tliis movement to m.onopoly. Concentration in business has made 
alarming strides in the last fifty years, hut as yet only a few in- 
dustries have expanded to such an extent as to control the prin- 
cipal part of the production of the whole country. But with the 
rapid progress made in the last fifty years, wliat will he the re- 
sult when we give tlie tendency three or four centuries in which 
1(1 work itself out? So far, our anti-trust legislation has heen 
fdundtd on the theory of enforced competition, but our best 
students of the question realize that at l)est these efforts are only 
jialliatives and that little has heen done toward the solution of the 
monopoly prol)lem. 

Price Control and the Regulation of Monopoly. Price con- 
trol seems tile only remedy lor monopoly. We realize that there 
should be only one street car system in a city, so the city recog- 
nizes that it should be a monopoly ; freely permits it, and con- 
trols it by regulating the rate which is charged the public. The 
railroads are a natural monopoly and Congress regulates rates. 
The same an lie said of telephone companies in cities, water. 
gas, and electric companies. If ten or a dozen of these companies 
should all attemipt to operate in the same city, the waste in the 
duplication of equipment would be appalling. Consequently, we 
recognize the monopoly in highly capitalistic industry seems to 
l)e carry :r!g us irresistilily to price control. 

VII. OBJECTIONS TO PRICE CONTROL 
A. Price Control Means Governmental Distribution of Wealth 

Price contr(_>l in the rtnal analysis means public control of the 
distribution of wealth. The industrial world is so nicely adjusted 
and the inter-relations are so delicate that when an adjustment 
is made in one place, a corresponding adjustment will often have 
to take place thruoi't the whole system. If llie government 
controls the price oi tlie necessities of life, it will have a profound 
influence of the cost of living and the cost of living is one of the 
most important single factors which determine wages. If the 
government controls the prices of wages, that means the control 
of profits. If the price of farm products is controld, that will 
control il:e price of land. Tluis wt- have the government control- 
ing tb.e price of land, ruils, wages, and profits, or, in other words, 
be'ng the determining factor in the distribution of wealth. Let 
lliere i;e no misunderstanding. We are not saying that this would 
be necessarily undesirable. On this point, people differ. All wc 
are saving is that, instead of lieing determined liy com])etition, 



GOVERNMENT PRICE CONTROL 17 

tluy would lie controld at least in large measure by government 
fiat. This is a view of the matter that the ordinary man never 
dreams of when he talks price control, but as President Hadley 
says : "Legislation is essentially a matter of remote consequences", 
and when we talk of price control by the government, we must 
1(11 ik tlicsc "remote consequences" squarely in the face. 

B. POLITICAL EFFECTS 

One of the most insuperable obstacles to successful price con- 
ifdl would be the political efifects of such a policy. The United 
States is now an im.mense country, the constituent parts of which 
have radically different interests. Some one or the other of 
lliese different interests control the governm.ent at different 
times, and, if w^e are to judge by what has been done in the past, 
prices would be controld in the interest of the section of the 
country that, for the time being, dominated the government. In 
the first place, we have the producer arrayd against the consumer ; 
thtn there are the manufacturing interests against the agricul- 
tural interests, and v/ithin the agricultural group, the cotton plant- 
er of the south has little in common with the wheat and corn and 
live stock producer of the west when it comes to price control. 

How It Has Workt In the Past. Let us see how this 
thing has workt in the past. When New England, New York, 
Pennsylvania, etc., were in the saddle, they voted heavy protect- 
ive tariff for themselves, and let the south and the west largely 
pay the bill. In 1894, when the shoe was on the other foot, the 
south and the west voted an income tax on the east and made the 
exemption so high that the tax would operate chiefly in the east, 
where the higher incomes existed. More recently the cotton plant- 
er was eminently satisfied when the price of the farmer's wheat 
was lowerd from nearly $4.00 to $2.00 a bushel, in the interest of 
winning the war. and keeping down the cost of living, while the 
price of his oun crops was permitted to soar from eight to thirty- 
live cents per pound, (^n the other hand, if the wheat farmer b.ad 
tlie doing of it, no one doubts that he would have $5.00 wheat, 
and ten cent cotton. 

This Obstacle Insuperable. Against this contention, it may 
be aruued that prices will be controld in such a way that all sec- 
tions of the country will he equaly benefited. That is. wheat 
and corn ard meat will be regulated in price, but so also will the 
price <if cotton and the price of manufactured products and this 
would be adjusted in such a way that all will benefit equaly. 
Such an idea, however, .is what Ingalls would have called an 



18 THE UNIVERSITY OF OKLAHOMA 

"Iridescent dream". Our government is party government and, at 
a given time, some particular interest is sure to be in the ascen- 
dency. In such a case, self interest will always control, for who 
can imagine tlie protective tarifif interests when they are in the 
saddle voting sharply progressive income and excessive profit 
taxes upon themeslves in order to equalize the burden thru 
out the country. But it may be argued that the price control will 
l)c in the hands of an expert commission that is, removed from 
the influence of politics. In answer to this recall the fact that it 
is quite generally believed that once upon a time certain interests 
that wanted a given decision from the United States Supreme 
Court counted heads and then increast the membership of the 
the court sufficiently that the newly appointed judges were the 
deciding factor. If the sanctity of the United States Supreme 
Court might be so violated at the hands of party politics, what 
would happen to a mundane price fixing commission? 

Other Political Consequences. Price control would inevi- 
tably have other political cimsequences. We have seen for in- 
stance in the case of wheat that the selling price of the wlieat 
controls the rent of land, and that rent of the land capitalized 
determines the price of the land. The result is that, when the 
price of wheat declines, it not only hurts the farmer, l)y the amount 
of the decline but it also subtracts so much from the value of 
the land. When prices rise, the opposite is true. Any one who 
doubts this elementary proposition has only to look at such states 
as Illinois and Iowa, where the high price of farm products dur- 
ing the war is causing farm land to sell all the way from $300.00 
to $500.00 per acre. The same principle works throut the 
industrial world. When prices go up or down, according to the 
adjustment of the market, these gains or losses cause people to 
congratulate themselves or growl, as the case may be, just as 
they do when they are visited by good rains or drouths. When 
a series of drouths occur, as has l)een the case in northwest 
Canada in recent years, or as occurred in Oklahoma a few years 
ago, the effect of which was practically to cut the price of farm 
land in half, the farmer checks his misfortune up to Providence, 
and keeps on his shirt. But how would he take it if Congress 
or the President, or tbe price fixing commission decided that, in 
the interest of tlie human race, tbe i)rice of wheat should be re- 
duced five cents per bushel for, say the next three years, there- 
l)y not only reducing his income from his farm for tlie given 
lieriod, l)ut also slicing ofl:' a few hundred dollars in its value, 
should he wish to sell it? The wealth of the United States is 



GOVERNMENT PRICE CONTROL 19 

roughly estimated at $560,000,000,000.00 and. if any political body 
had arbitrary power to reduce values for one man and enhance 
them for another thru control of prices, we would indeed be 
fortunate if we escaped civil war ])efore the attempt was alian- 
dond. 

C. TECHNICAL DIFFICULTIES OF PRICE CONTROL 

What basis is the government to use in determining prices? 
Is cost of production to decide, and if not, what will be the 
liasis? As a matter of fact, during the war. cost of production 
was usually used, except in the case of wheat, but what is cost 
of production? There is no such thing as THE cost of produc- 
tion for the v/hole of a product taken together. It costs one 
farmer one thing to produce wheat and another farmer another. 
Take the case of steel. The steel mill that has a strategic posi- 
tion because it is most favorably located as regards proximity to 
its raw products, and, at the same time, is operated at a high de- 
gree of efficiency, will have a very low cost of production. From 
this most efficient mill, there is a graduation in cost of produc- 
tion to the least efficient mill that can stay in the business and 
sell its product at the market price. Or the case of coal is a 
lietter example yet. vSonie mines are very shallow, the vein is 
very thick, and there is complete alisence of water and other such 
olistructions. On the otlier hand, another mine may he very 
deep, the vein is thin, and there is great expense in keeping the 
mine free from water and bad air. But the demand for coal is 
such that both mines must be operated in order to meet the supply 
Between these two mines there are probably a hundred gradations 
in the cost of producing a ton of coal. In terms of economics, 
the mine having the greatest cost of production and yet whose 
product is necessary to m.eet the demand for coal is calld the 
marginal mine and its cost of production is calld marginal cost. 
During the war, the various price fixing agencies usually used 
marginal costs to determine prices. Every concern operating at 
a lower cost of course found the difference pure velvet. The 
government was compeld to make the marginal costs determine 
prices for, if prices had been lower, these marginal concerns 
could not have l)ten operated and the production of steel, coal, 
and many other such products would have been greatly curtaild. 
P>ut this procedure accomplishes nothing, for everyone knows 
tliat where competition reigns, market prices now are determind 
by marginal costs. Under norm.al conditions the i;Overnment 
v.ould be doing nothing but putting its stamp i-^i approval on pre- 



20 THE UNIVERSITY OF OKLAHOMA 

!?(.iit market prices. 

The Only Other Method. The only other method that ha. 
been suggested would he that in which the government houglu 
the supply of each producer, paying each one his cost of produc- 
tion. The government would then set a price to the buying public 
wliich would be something like the average of the various prices 
It has paid the dififerent producers. This plan has only been 
suggested, for it takes no great stretch of the imagination to 
know what would happen should the government pay one farmer 
who happens to have a low cost of production because of his 
efficiency, say $1.00 a bushel for his wheat, and then pay $1.50 
to his indolent and inefficient neighbor whose shiftlessness caused 
him to have a high cost of production. Apply this proposal to 
the iron and steel business, coal mining, etc., and any one can see 
the consequences. Price fixing, therefore, is somewnat like the 
problem of abolition of property. It is extremely easy to ex- 
patiate at length upon the subject, but wlien it comes to a concrete 
program to accomplish the result, it is a difficult matter to present 
■fmc that cannot be riddld. 

D. THE GOVERNMENT AS A DISTRIBUTOR 
OF GOODS 

The fourtii difficulty in connection with price control is the 
fact that it would throw the whole onus and responsibility of dis- 
tributing goods, both in time and place, upon the government. 
Professor L. D. H. Weld, probably the foremost authority on the 
marketing of farm products, states this problem as follows: 

"Frotri the first, the government has not realized sufficiently 
the function that it must assume l)y taking away the speculative 
and price making functions of mercliants. Thru speculative 
competition the market price becomes adjusted, so that tlie supply 
of the commodity is automatically distributed geograpiiically, so 
that each section of the country, each city, and each store gets 
the supply that it requires. It also automatically distributes the 
availalile supply over a period of time, so that it lasts until a new 
supply can be obtained. 

"If the government deprives merchants of performing these 
two important functions, the government must parcel the supply 
out to each community in accordance to its needs, and it must 
regulate the out flow from week to week, so that the supply will 
last until the next crops arc availaljle." 

It is doubtful if the student approaching this question for the 
first time will realize the full significance of the statement just 
quoted from Professor Weld. .A.ny one wishing to develop this 
argument is advised to consult first some standard work on the 
economic function of si)cculatioii, for only by realizing the |)art 



GOVERNMENT PRICE CONTROL 21 

played by speculation in modern industry will he sense the full 
significance of the point made. 

E. PRICE CONTROL AND THE RESTRICTION 
OF OUTPUT 

One of the difficult problems to be met under a price control 
regime would he that of maintaining output. If prices are fixt 
a little bit too low, it will certainly have the efifect of driving the 
marginal producers out of business. The result of this will be 
that production will be curtaild, which in turn must force up 
prices. On the other hand, all producers may be dissatisfied 
with the price named l)y the government and decide to curtail 
their production to such a point that the decreast supply will raise 
prices to a point wiiich they consider remunerative. We may 
have rcacht the point where the government can tell a man that, 
if he wishes to produce, he must sell his product at a given 
figure, but we certainly have not rcacht the point where the gov- 
ernment can name a price, proclaim martial law and compel 
production at that figure. LTndoubtedly, this is a very serious 
proposition. This factor did not operate to any very great ex- 
tent during the war, for altho there was dissatisfaction with 
many of the prices named, patriotism and social pressure causd 
dissatisfied firms to maintain their production. But. in some 
lines, even this pressure was not sufficient, and according to Pro- 
fessor Blackley, the price of raw sugar, negotiated by Mr. Hoover, 
resulted in a 14 per cent decrease in acreage of sugar ])eets in 
this country. 

F. PUBLIC OPINION NECESSARY FOR 
PRICE CONTROL 

Public opinion is necessary to successful price control. If 
we will stop for a minute to consider why the policy of price con- 
trol, during the war, was as successful as it was. we .shall see 
more vividly how difficult it would be in time of peace. Price 
control, during the war, was consciously used as a means of win- 
ning the war. The war fever ran high. Certain persons were 
conscripted to carry a gun ; others of technical ability were calld 
upon to do that which they could do best. It was almost liter- 
ally true that everyone was conscripted to do that for which he 
was most fitted. One of the most important things was to main- 
tain the morale — especially the morale back home, for, if the 
home folks stood firm, there was little to fear about the army. 
One of the most important things in maintaining the morale in 



12 THE I'NIVERSITY OF OKLAHOMA 

the civilian population was keeping down the cost ot living. 
Price control was therefore, a war measure and was on the same 
footing as the draft law. The result was that those whose 
duty it was io i)roduce acquiest to the command to produce at a 
reasonable profit, the same as did the drafted men. The producer 
who tried to evade price controling regulations was placed on the 
same footing as the slacker who attempted to evade the draft 
law. It was this great social pressure that made successful price 
control in war time a comparatively easy matter. It is for this 
reason tliat ir.uch of the war experience with price control will 
not apply wlien we come to a condition of peace. 

VIII. CONCLUSIONS 

The student should understand that, in presenting these ob- 
jections to price control, we have stated them as forcibly as 
possible. Many of them are tendencies that would take a great 
deal of time to work out. Many of them would work with full 
force only when all or, at least, a large proportion of prices are 
controld by the government. As long as only a few prices were 
controld, the machinery of the competitive market would continue 
to determine prices, and the prices of regub'"?d commodities 
would still have a close relation to this standard. It would only 
be where all prices are controld that the government would be in 
danger of losing touch with the norm as determind liy the equilib- 
rium of supply and demand. Where the government exercises 
only a minor influence or where it touches only a few commodi- 
ties, we must be cautious about i)ressing these objections too far. 



CONTROL BY LAW OF SUPPLY AND DEMAND 

AND COMPETITION 

Dr. Chas. H. Van Hise, Late President of the University of 

Wisconsin 

Prices Before the War. 

Under the condition of abundant raw and manufactured 
products, the prices of commodities in this country before the 
war were not high, although in many cases they were higher 
than perhaps was justified because of combinations and coopera- 
tion, to be later mentioned. 

For control of prices the United States was dependent upon 
the so-called law of supply and demand in connection with com- 
petition. If tile supply of any article was somewhat short, the 



GOVERNMENT PRICE CONTROL 23 ' 

price did not become unduly cnhanct, l)ecause in most cases 
substitutes could be found. Thus, if there were a shortage of 
one of the fruits, while the price might rise, it was not necessary 
for everyone who had been accustomd to use this fruit to have 
it. Other fruits would be used as substitutes, and thus the in- 
crease of prices was kept within reasonable bounds. 

From the foundation of the Nation, it has been the accepted 
theory that if competition could be kept free, the law of supply 
and demand would adequately control prices and quality. How- 
ever, long before the war the inadequacy of the law of supply 
and demand and unregulated competition to control prices had 
been recognized. As a result of rapid and cheap transportation 
and instantaneous communication, there came the period of con- 
centration of industry under which the modern great corpora- 
tion arose. With concentration, cheap transportation, and swift 
communication, it liecame easy for the different organizations, 
producing the same articles to unite or to cooperate and thus 
control the market. This they did- These concentrated or- 
ganizations, whether a single corporation or cooperating cor- 
porations, are popularly called trusts. 

The Antitrust Laws 

In consequence of the facts presented, the Sherman anti- 
trust law was passed by Congress in 1890. By the statement of 
this act, every contract and combination in the form of trust or 
otherwise in restraint of trade or commerce v.^as declard to be 
illegal, as was also monopoly. The enactment of the natior.al 
antitrust law was followd shortly by the enactment of antitrust 
laws in almost every State in the Union. 

For a number of years after the Sherman Act was passed, 
actions under the law by the Attorney General of the United 
States were few ; but in recent years, and especially in the past 
decade, numerous actions have been brought to dissolve com- 
binations and to prevent cooperation. Perhaps the most famous 
cases which have been decided affirmatively were those of 
Northern Securities Co., the Standard Oil Co., and the Ameri- 
can Tobacco Co. Two great cases which are still pending are 
the United States Steel Corporation and the International Har- 
vester Co. 

Prosecution under the Sherman law rests with the Attorney 
General. It is natural that action should have been brought 
bv him in those instances in which offenders were most con- 



24 THE UNIVERSITY OF OKLAHOMA 

spicuous and most unpopular. Altogether some hundreds of ac- 
tions have been brought, and a number of the ofifenders have 
been found guilty and their organizations have been compeld 
to dissolve. 

In some of the States, also, actions have been brought for 
the dissolution of combinations and contracts in restraint of 
trade. 

Cooperation To Control The Market. 
Notwithstanding the national law, which has been on the 
statute books for 27 years, and notwithstanding the State 
statutes, many of which have been on tiie statute books for 20 
>ears or more, cooperation exists throughout tlic United States 
tor every important standard article. This is true from the 
country crossroads to the great metropolis. At the country 
cross roads the two or three grocers charge the same prices for 
sugar or flour. In almost every city there are daily or weekly 
agreements by the dealers in regard to prices to be charged for 
standard articles that day or that week. For many articles 
boards of trade gauge the market and fix the prices. In the 
great city there may be scores of dealers in anthracite; in the 
little town two. In each case the price will be the same from 
each dealer in a given community. Precisely the same thing 
IS true for ice. the antithesis of anthracite; and so on for everv 
standard article. 

Destruction of Commodities to Hold up Prices 

The cooperation and control of the market to keep up prices 
has in many cases even gone so far as to lead to the destruction 
of perishable goods. There is scarcely an important city of the 
country in which at some season of the year perishable vege- 
tables, such as melons, squash, lettuce, beets, cabbage etc 
have not been allowd to go into the dump rather than to the' 
market and thus lower prices. Prices have also been held up 
by keeping out of the market a vast quantity of the product 
l<.r the tune being. This is illustrated by the coffee of Brazil 
Often the sale of a less quantity -of a commodity at a high price 
gives a larger total than the sale of a larger quantity at a lower 
Vo\T Ju P""''P'^ '' ^^^" illustrated by the potato crop of 
Ult. The crop was short not only in the two chief producing 
states. Wisconsin and Maine, but generally. The smaller pro- 
duction realized a larger amount to many farmers for their half 
crop than for the full crop the previous year. 



GOVERNMENT PRICE CONTROL 25 

Cooperation General 

It therefore may be said without fear of contradiction, that 
in the matter of prices there is cooperation between concerns 
of the same class for every standard article for all or a large 
part of the United States. This is inevitable under modern con- 
ditions, because it is so much more profitable to cooperate than 
it is to compete. Rapid transportation gives a steady flow of 
goods to any community. Telephone communication is in- 
stantaneous. The same class of dealers will all have standard 
articles, for which they will charge like prices. These state- 
ments, made many times in public addresses thruout the United 
States, have never been challenged. 

The arrangements for cooperation are not written out in 
documents and signed, as formerly was the situation; but they 
are no less effective in their binding force, and instead of being 
sporadic, as was early the situation, they are almost universal. 

Further Legislation to Control the Trusts 

Because of- the general dissatisfaction thruout the country 
with the existing situation, Congress in 1914 passed the law 
creating the Federal Trade Commission, and a supplementary 
antitrust act known as the Clayton Act. 

Before 1914, there existed the Bureau of Corporations, with 
authority to investigate into the practices of the various cor- 
porations and to report to the Attorney General violations of 
the antitrust law. These powers went over to the Federal Trade 
Commission. Also, unfair methods of competition in commerce 
were declared to be unlawful, and the Federal Trade Commission 
was empowerd to prevent the use of such unfair methods. Tiie 
Clayton antitrust law also introduced a new principle in regula- 
tion, that practises and combination were prohibited which re- 
sulted in substantial lessening of competition. 

It thus appears that antecedent to the war, while there was 
an abundance o'; natural resources and while there was an abun- 
dance of commodities for all, there was deep-seated dissatisfac- 
tion with prices, and the first steps had been made to regulate 
industry thru the antitrust laws and thru the Federal Trade Com- 
mission. 

Inadequacy of the Antitrust Legislation 

By one group of people, including a numi)er of political 
economists, it was held that, while the Federal Trade Commission 
had been l)eneficial in preventing unfair practices and by its watch- 



26 THE UNIVERSITY OF OKLAHOMA 

fulness had made Cdiispicuous violations of tlic antitrust law less 
common, the legislation of Congress did not afford a permanent 
solution to the prohlcm of control of prices and quality. 

They held that it has been proved that the laws of supply 
and demand and competition cannot he depended upon adequately 
to control prices. They cited as evidence of this position the 
universal cooperation in the control of the market for all standard 
articles throughout the country. This group of men said, that 
since the law of supply and demand had wholly failed to intro- 
duce real competition, the same principle should he applied to 
standard articles that has been so successfully applied to the pub- 
lic utilities. 

Before there was regulation of the railroads the owners re- 
garded their btisiness as private and resented any interference on 
the part of the public. Under these circumstances there were 
alternating high and low prices. One day there would be cut- 
throat competition, during which both passenger and freight ser- 
vice wotild be performd at much below cost, and then the com- 
panies would get together again and fix such prices as the market 
would bear. Indeed, the fundamental principle as regards 
freight and passenger rates was to exact what the market would 
bear. In many cases the prices fixt were so high as not to 
comply with the law of maximum return which would have l)een 
given iiy lower rates because of the larger quantity which would 
have been handld. In addition to excess charges the uncertainty 
and variability of rates was seriously detrimental to business be- 
cause the charges could not be forecast. Finally there were ex- 
tensive uses of unfair practices, such as discrimination in rates 
between shippers and in various other ways. The indefensiliU 
methods included reliates and even drawbacks. 

The Control of the Public Utilities 

It is not the purpose here to narrate the long contest and 
slow progress in securing control of the public utilities thru 
the inter-state and State commissions. To settle firmly the prin- 
ciple of control of the jjublic utilities thru the commerce com- 
missions required some 25 years of severe and frequently bitter 
contest. 

The principle of contrt)! of iniblic utilities through commis- 
sions is new recognized as wise, both by the public and the 
owners of the public utilities ; neither would go back to the 
chaotic condition under which the railroads were operated in ac- 
cordance with the lav/s of supply and demand and competition. 



GOVERNMENT PRICE CONTROL 27 

It is nov/ settled .that, so far as the public utilities are con- 
cerned, rates must l)e fair, that they must be stable, and that 
there must be reasonable service. Changes in the rates either up 
or down must have the approval of the appropriate commission. 
Wliile the commission itself does not directly fix freight rates, 
;i proposed increase in the rates must be approved by the appro- 
priate commission as necessary under the circumstances to give 
a fair return. Also, if it is proposed that the rates be reduced, 
the approval of the commission is likewise necessary. This pro- 
vision has been found to be very important, for not infrequently 
by small utilities companies, rates have been placed so low as not 
to provide for depreciation, and liankruptcy was certain in the 
future. 

The pu1)lic may be injured just as much by allowing a pub- 
lic utility to depreciate in its efficiency as it is by too high a rate. 
The utilities statutes contradict the theory that the laws of sup- 
ply and demand and competition are adequate to control rates, 
altho this may not have been recognized by the legislatures 
making the laws. 

The Pure-Food Laws 

During the past decade the pulilic has generally recognized 
the complete failure of the laws of supply and demand and com- 
petition to produce quality for foods, drinks, and drugs. During 
the first decade of this century the pure-food and drug laws 
were passt by Congress for interstate commerce and by nearly 
every State of the Union, the majority of the States acting be- 
tween 1903 and 1910, and the United States in 1906. Not only 
were these laws passt, but an agency was created, both for the 
United States and in each of the States, whose duty it was to 
see that the laws were complied with. Scarcely a decade after 
the passage of these laws it seeins to us most extraordinary that 
we should ever have been willing to be deceivd by false brands, 
to use adulterated medicines, and to eat poor and frequently 
liarmful food bearing the name of wholesome products. It now 
seems amazing to us that the meat packers opposed most bitterly 
the public inspection of meats. Before that time diseasd, un- 
sanitary, and poisonous meats had been sold in large quantities. 

Common Feature of Utilities and Pure-Food Laws 

The essential common feature of both the public-utilities and 
the pure-food laws is that an agency is created which may be 
calld a commission, or one of several other names, whose duty 
it is to give its entire time to the protection of the pulilic upon 



1 



28 THE UNIVERSITY OF OKLAHOMA 

its (nvn initiative. The agency in a given case may ]ic a single: 
man or several mtn. \ 

ISefore the public-utilities and pure-food laws were passt a 
wrongd individual had redress in the courts; Imt in most cases the 
loss of the individual was small, and only in exceptional cases 
was this redress a practicable one. 

The revolutionary feature of control lliru administrative 
agencies is that the individual is protected thru the continuous 
activity of piJjlic officials, one of the primary duties of whom 
is to see tliat the laws are obeyd. 

Desirable to Extend the Principle of Regulation 

The great gains resulting from the pu1>lic-utilities and pure- 
food laws led a group of men to propose that the same principles 
be applied to all standard commodities. They took the position 
that the production, distribution, and sale of necessary standard 
articles are vested with a public interest just as are public utili- 
ties. They held that there is no essential difiference between the 
United States Steel Corporation and the Pennsylvania and New 
York Central Railroads, except that the operation of the one has 
been declared to be vested with a pul)lic interest and the others 
have not been so declard. 

Can anyone doubt, when a single great corporation owns sub- 
stantially half of the vast iron-ore deposits of the country and a 
large proportion of the coking coals necessary to produce iron 
l)roducts, and manufactures half of the iron and steel of the 
United States, that the operation of such corporation is not 
vested with a public interest? 

It took the liuilding of the world to produce the deposits of 
iron ore and the coal beds. They cannot increase. They are 
natural resources, limited in quantity, available to mankind. 

Can anyone seriously hold that the manner of their exploita- 
tion and the prices that siiall lie chargd for them in the raw 
state and in manufactured form arc not matters of public inter- 
est ? 

The Federal Trade Commission 

Believing these principles, it was proposed long in advance 
oi the creation of the Federal Trade Commission that there be 
created Federal and State Commissions that should have sub- 
stantially the .same powers for the standard products as the pub- 
lic utilities commissions have in regard to utilities. It was held 
that for a standard article, such as steel rails, sugar, flour, or 
meat, it is just as advantageous to have the price fair, reason- 



GOVERNMENT PRICE CONTROL 29 

al)le, and stable as it is for the i)ul)lic utilities ; and it was held 
that these advantages could only be secured, when cooperation 
to control the market everywhere exists throughout the United 
States, by regulation through administrative agencies. 

The Orthodox Economic Position Held by Great Majority 

The above views have not been generally accepted by the 
public at large, by State legislatures, nor by Congress. Indeed, 
in a number of cases in which certain privileges were given in 
the direction of cooperation by legislative authority with certain 
powers concerning regulation, there was attacht to the law the 
statement that it was not to lx> interpreted as repealing or modify- 
ing the antitrust laws. 

Radical Nature of Government by Commission 

Jt is perhaps not surprising that the public is slow to extend 
government by administrative agencies. This extension of gov- 
ernmental powers is the most revolutionary which has been in- 
troduced in the United States system since the adoption of the 
Constitution. Under the Constitution it was the theory that exe- 
cutive, legislative and judicial powers were to be separate and in- 
dependent. The administrative commission has general authority 
to make rates fair, to make service reasonable, and to make rules 
in regard to particular matters, which are in fact legislative func- 
tions. The commission makes inquiries in regard to violations of 
the law, which function is judicial. The commission administers 
the laws under which it is operating continuously, which function 
is executive. Thus the commission is an expert body combining 
legislative, executive, and judicial ftmctions. 

The people are suspicious of radical changes in the form of 
tlie government and are suspicious of experts, who necessarily 
compose the commissions, and therefore, for these reasons, have 
lieen slow to create commissions having power over industry and 
commerce. 

Public Has Faith in Supply and Demand and Competition 

Another rcasoti why the pulilic has been hesitant to accept 
the principles of cooperation and regulation is that the people 
still have faith in the law of supply and dernand and in compe- 
tition. They believe that if competition could be enforced 
through the antitrust laws, the law of supply and demand would 
work so as to result in fair prices. Since this has been the faith 
of centuries, indeed has almost the sanctity of religion, it is not 
surprising that the conclusion that under modern conditions it is 



30 THE UNIVERSITY OF OKLAHOMA 

utttrly inadequate to protect the public is not readily accepted. 

Even after a quarter of a century of trial of the Federal and 
State antitrust acts, legislatures are still sharpening the teeth of 
these laws, hoping that in that way they will prevent conrol of the 
market through cooperation and secure fair prices to the pul)lic. 

Little Gain From Dissolution of Trusts 

When the Nortliern Securities, Standard Oil, American 
Tobacco, and other lesser organizations, were dissolvd under the 
antitrust law, the public expected that their hopes for results 
would be achievd. However, after the dissolution of these and 
other companies, there was no decrease in prices. Indeed, in 
many cases the value of the stocks of the dissolved companies 
increast greatly in amount shortly after dissolution, and div- 
idends went on as l)efore. 

In two instances the Federal Trade Commission lias investi- 
gated the matter of prices — tobacco and gasoline. In neither 
case was there any decrease in price as a result of the dissolution. 
On the contrary, it was the rapidly advancing price of gaso- 
line after the dissolution of the Standard Oil Co.. wliicli led to the 
investigation by the Federal Trade Commission. 

So far as the pul)lic is concernd* the important thing is the 
reduction of prices. If great corporations are dissolvd and the 
pul)lic does not secure commodities at lower prices, it is difficult 
to see wherein the pul)lic gains. 

Supply and Demand and Competition Very Important 

in making the aliovc statements, it is not meant to imjiiy 
that supply and demand are useless as regulators of price, or 
that competition is not valuable. It is only meant to imply that 
they are inadequate. If the quantity of diamonds could be in- 
creased by tenfold, diamonds would be lower in price. The 
same is true in regard to ostrich feathers and sealskin coats. 
The rarity of the article makes the price very high. But the law 
of supply and demand is not limited to luxuries. We know 
that, in tlie case of perishable articles, especially illustrated by 
vegetal)les, the prices vary greatly, being high at the opening of 
the season and low later ; that is, unless artificial methods are 
used to keep the product out of the market. Also, supply and 
demand have a most important influence in the control of prices 
for standard commodities, such as cereals, textils, steel, and 
fuels, as will be shown l)y later discussion. 

While unquestionably tlie laws of supi)ly and demand and 



GOVERNMENT PRICE CONTROL 31 

■competition are potent forces, they have hect)me relatively less 
potent with rapid transportation and instantaneous communica- 
tion, so that while possibly roughly adequate in the past, tlicy 
are no longer adequate to control prices. 

Summary 

In summary, it may be said that before the world war. the 
public l)elievd in the adequacy of the law of supply and demand 
combined with competition ; and therefore the laws that have 
been enacted have been for the purpose of eliminating unfair 
practices and compelling competition, so that the law of supply and 
demand would' produce the largest effect. 

A smaller group held that supply and demand and competi- 
tion are inadequate, and they proposed the extension of the prin- 
ciple of regulation applied to the public utilities to all standard 
articles, in which experience has shown that the market may l>e 
controld thru cooperation. 

The Causes of Mounting Prices 

Tile fundamental cause of the mounting prices is that whicii 
has already been explaind, an unusual and extraordinary de- 
mand for all essential commodities. However, this has lieen only 
one factor in the process. 

When it was once appreciated that there was a relative 
shortage of the essential commodities, the home purchasers, in- 
stead of buying ordinary amounts, purchased in advance of their 
needs. Thus the family, instead of buying flour by the sack, 
bought a number of barrels, or, in some cases, l)ought flour for 
years ahead. The same is true in regard to sugar. Similarly 
during the spring and summer of 1917, when it was appreciated 
that there was a shortage of coal, many manufacturers were try- 
ing to protect their businesses by accumulating reserves to carry 
them through the winter. The same was true of those who de- 
sired coal for heat. The consequence was that the demands of 
purchasers were far beyond what would have been necessary to. 
meet actual needs hafl the ordinary procedure been followd. 
This frenzy of excessive l)uying has greatly aggravated tlic situ- 
ation. 

Another most important cause of the enhancing prices was 
that a time when there is great demand is especially advantage- 
ous for speculators to accumulate great stores of goods of various 
kinds and hold them for advances in prices. T{.-:s was done on a 
great scale thrunut the country for every essential commodity. 



u 



32 THE 1:NIYERSITY OF OKLAHOMA 

Finally, wiicn ihe conditions are as above, it is especially easy 
for those in a given line of business at a particular locality to co- 
operate to push prices upward and thus greatly i.ncrease the pro- 
fits of their liusiness. Tliis also was done on a vast scale for 
many commodities. 

Based ui)on the first factor, the second, lliird. and fourth 
factors have come in, each with reinforcing power, to accelerate 
prices. The tendencies above described, once started, are cumu- 
lative, and tiie enhancement of prices goes on with increasing 
velocity. Tlie prices of foods are advanct ; the employees must 
have higher pay because of the increast cost of food; the raw 
materials for manufactured articles are advanct ; the manu- 
facturer charges a higher price for his articles because he must 
pay more for his labor and an increast price for his raw mater- 
ials. At each stage the advance of prices is mace more than 
sufficient to cover the additional cost. The cycle thus completed 
is begun again with food, and the circle once more gone around. 
The second cycle completed, the conditions are right for a third 
cycle, and so on indefinitely, with the result that prices have 
l)een and still are rising beyond all reason, like a spiral ascend- 
ing to the sk}-. 

Failure of Law of Supply and Demand and Competition 

The facts which have been presented show that the law of 
supply and demand and competition adequately to control prices 
have broken down, for the simple reason that for every staple 
commodity the demand is greater than the supply. In normal 
years before the war, as we have seen, the potential capacity of 
the United States for almost every essential commodity was 
greater than the home demand. The agricultural lands were de- 
velopt so as t(,) produce a large surplus, all that could I)c mar- 
keted at home and abroad at a reasonable price. The coal mines 
were so developt that they could produce many million tons more 
than the market demanded. Steel and iron mills similarly were 
developt so as to meet not only the ordinary demand, but to res- 
pond quickly to exceptional demands. Under these circumstances 
the prices, if not adequately controld, had been largely controld 
by supply and demand, except where there had l)een cooperation 
of purchasers or manipulators, or both, to control the market. 

The Excess Demand. The situation was wholly changed 
l)y the world war. For every important commodity the demand! 
exceeds the supply. For the staple foods tlie demand is greaterj 
than any possilile supply. For coal the demand exceeds the 



GOVERNMENT PRICE CONTROL 3.? 

capacity tor- delivery. Fdr siitl ilu- (kniainl is tar hcyoiul ilic 
capacity <>t" all mills. 

It is not pussihlc to give average percenta^^'es of vlie extent 
M_ which the demand exceeds the supply; but it rs sate to say that 
ilie percentage upon the average would not l)e large, jirobably 
not more than 20 per cent, and for scarcely any connnodity more 
than v^O or 40 per cent. 

However, this moderate excess demand of. say, 20 per cent, 
taken in connection with buying in advance of needs, of forstall- 
ing by speculators and combinations to control the market, has 
been sufikient to increase the prices of many essential commodi- 
ties by ICO, 200, .^0!) and even 4(X) per cent, and for certain articles 
.greater amounts. 

Enormous Excess Profits 

UnJtr the v. aiditions dcscrilied in the foregoing page-, 
nievitable that the profits of' the great corporations dealing in tlu 
essential commodities should be excessive. There 4)as been no- 
.; comparable to the profits of the present war in the history 
civilization. In the United States, the most exploitive - pro- 
ring of the days of the Civil War was trivial as corapard 
\. ;rii the enromous sums which have been obtaind during the pre- 
sent war by the great corporations dealing in the essential com- 

iiieant the amount by which the profits 
lie war times exceed those of normal times before the war. 
Cereals. There are no avai!able*iigures showing the amount 
he excess iirufus for those producing and handling the cereals 
■ li the war period as compard with the conditions before the 
war. To obtain accurate figures in this matter is exceedingly 
difficult Iiecause the profits arc di.stributed among the producers 
of grain, dealers, millers, jobbers, and retailers. ' Mr. Herbert 
Hoover, in a statement betore the Senate Committee on Agricul- 
ture. June 19, 1917, stated that "in the last five months on the 
item of flour alone $25,000,000 ha? been extracted from the Amer- 
ican consumer in excess of the normal profits of manufacturers 
and distributers." If this statement is correct, the total excess 
profits made upon the grains during the last year must amount 
to more tlian $1,000,000,000 and may have reacht $2,000,000,000. 
Meats. According to figures presented by one of the Treas- 
cxperts to the Finance Committee of the .Senate, the excess 
l)rofits of 1916. as compard with 1914. and tlie excess profits of 
'hi' t((ur biL; paclsinir ci Niinanie-; nf niirayii vvcr>' :is fii1]ii\vs- 



34 THP: I'NIVKRSTTY OF OKLAHOMA 

CorpDration 1914 1916 Gain -- 

Armour & Co. if 7,509,908 $20,100,000 $12,590,092 

Swift & Co 9,450,000 20,465,000 11,015,000 

Morris & Co. 2,205,672 3,832,213 1,626,541 

Wilson & Co. *1,511,528 4,913,873 3.402,345 

Total 20,677,108 49,311,086 28,633,978 

* 15 months 

It should lie understood, however, that the excess profits of 
$28,633,978 are not exclusively from meats, for the reason that 
these packing companies are engaged in allied industries and an 
unknown portion of them are from other sources than meat. 

Metals. In regard to the excess profits in metals, Senator 
Sinmions, on August 10, 1917, presented to the Senate figures 
compiled by J. P. Morgan & Co. showing the excess profits for 
1916 as compard with 1914 of some of the larger metal manu- 
factories, as follows : 

United States Steel Corporation $207,945,000 

Bethlehem Steel Co. 53,715,000 

Anaconda Copper Mining Co. 39,087,000 

General Electric Co. 6,523,000 

American Smelting & Refining Co. 11,158,000 

Total for the five corporations $318,428,000 

Petroleum. In regard to the excess profits of petroleum, 
tliose for 1916 are stated on the same authority to l)e, for the 
Standard Oil Co., of New York, $20,425,000. 

Manufactured Commodities. The excess profits of mani'- 
factured products other than the metals have been similarly large. 
From the same authority the excess profits of the Du Pont Pow- 
der Co. for 1916 are placed at $76,581,000 for the Corn Product.s 
Co. at $3,798,000. and for the United States Rubber Co. at 
$4,537,000. 

Forty-eight Corporations: It is also stated that the excess 
l)rofits of 48 corporations, which include the above-mentioned 
with others, for 1916 as compard with 1914 amounted to $659,- 
858,490. 

Wood. The Federal Trade Commission, in a letter dated 
June 13, 1917, to the President of the Senate, recommended gov- 
ernmental control of the production of print and book paper. 
The letter stated that if in 1917 the same tonnage is produced as 
in 1916, at the price prevailing in June, the 1917 output wouhi 



\ 



GOVERNMENT PRICE CONTROL 35 

cost $105,C00,CCO, whereas the cost of this amount in 191() was 
$70,000,GOO. It said further that at least 50 per cent of this in- 
crease of $30,CCO,000 would be excess profits over those of 1916. 
It was also stated that for the second half of 1916 the prices for 
print and book paper were from 65 to 84 per cent higher than 
in 1915. The average profits of 41 of the book-making paper 
mills for 1916 were 100 per cent more than for the previous 
year. 

Conclusion Regarding Excess Profits 
The foregoing facts show that war conditions have been taken 
advantage of by corporations generally throughout the United 
States to exact excessive profits. Indeed, in many cases the de- 
mands for commodities have been so pressing and the enhanct 
prices so great as to make the exactions amount to extortion. 
When prices for essentials are increast two, three, or four fold 
and result in profits Iieyond the dreams of any imagination before 
the war, it cannot be said that the appeal of President Wilson, 
on patriotic grounds, to men in lousiness and industry not to 
practice profiteering, has led to any substantial results. Nor can 
it reasonably be expected that such an appeal would have been 
successful. When all lines of business are following the .same 
practise, it cannot be expected that one corporation or one busi- 
ness man would depart from the practises of the others. 

Further Attempts to Control by Indictment 

As before the war, there have been attempts to prevent co- 
operation, and thus control prices and profits through prosecu- 
tion under the Sherman Act Thus on May 24, 1917. by the 
Federal grand jury at Boston, 88 dealers were indicted for violat- 
ing the antitrust law to control the entire crop of onions to en- 
hance the prices of that product. On June 2, the Federal grand 
jury at Chicago, brought indictments against 25 individuals and 
firms acting on the Chicago Butter and Egg Board, who were 
charged with manipulating the markets to increase the price of 
eggs. In New York it was announct June 19 that 51 coal oper- 
ators and 102 corporations were put on trial before the United 
States district court for violating the Sherman Antitrust Act by 
combining to increase and fix the price of certain coals. Other 
indictments have been made along the same line. 

Some of the prosecutions, notably that relating to coal, have 
l)een abandond ; others have been continued. However, whether 
the prosecutions arc fcv,- or many, are abandond or continued, 
they have Ijeen utterly futile to prevent general cooperation to 



.so . . J : . _ .\ 1 \ ■ E RS 1 r \' OF O K L A n O \\ .\ 

control the market and thus enhance prices i. ,i all t -seiitial 
commodities. The failure in these respects has been just as com- 
plete as was failure along similar lines before the world war. 

The facts presented in the foregoing pages demonstrate bej-ond 
itoubt that we cannot rely upon the laws of supplj- and demand 
;uul competiticm to meet the situation under war conditions. 
The onh- possible way in which prices and profits can be reduced 
to reasonable amounts is by , governmental exertion. Therefore 
the extraordinary measures presented beloAV to meet the situa- 
tion have been adopted. These measures are so great a develoi)- 
ment as almost to amijunt to a revolution in the fhethods of public 
control '" •.■-"•'ii'~r''"i ;,vl"'"-'- -i-Tl .-...•>-.. vf"-^-'^. 



THE CONTINUATION OF REGULATION AFTER 
THE WAR 

The general answer must be made tlun 
proved beneficial to the public they should l;c cuntinued, and so 
far as they have not been beneficial they shoidd not be coiitituKil 
The difficulty will be in indicating those measures wbii 
normal conditions will be beneficial and detrimental. 

In this matter, however, there are certain general considera- 
tions which should have weight. It is certain that, following the 
war, combination aliroad will be general. Already Germanj' is 
ccijnsidering buying and selling nationally; and whether or not 
.she decides to do this as a direct governmental activity, there is 
no question that ihe buying and selling by Germany uf any 
commodity will be done if not through a single organization at 
least through such a limited number of organizations that they 
will cooperate perfectly in their production, buying and selling. 

Furthermore, it is highly prol)able that this cooperation will 
extend even beyond Germany and will include her allies. Under 
these circiunstanccs it is certain that any attempt to meet Ger- 
many in world trade under the individualistic method of law of 
supply and demand and competition cannot but fail. If we do not 
meet Germany's competition l)y national organization as efficient 
as her own, we may as well at once concede that Germany will 
yain world ilominancc for those trades and industries for which 
slie lias adequate resources. 

.\lso not only during the war but for a consideral)le period 
after the war, the demand for food and other essentials may be 
greater than the possible supply. As we have seen, the food 
prochicton of Germany, France, and Italy has declined alavminglv 



(JOVERXMENT PRICE CONTROL 37 

iluriiiL; the war because of lack ot fertilizers .uul insufficient 
labor. Their 'herds will have been greatly diminisht. These 
icndcncies will continue thruout the war so that their agricul- 
utral production and herds will- become even smaller. It is pro- 
bable that for a long- time, possibly for several years, we may have 
an insufficient surplus to meet the legitimate needs of the Allies: 
indi'td it is little short uf (-(.'rlain ib:ii tliis will be tnu- for a nuni- 
1 commodities 

.^ball we revert Im uii. ici\\ i--i ^ui'[;i\ .lim ui.in.uni auu i:iMii|iv- 
lition, and allow goods to be exported abroad in imlimited quan- 
tities, so that our t)wn prici ' still higher levels, and im 
iu-eferencc be given abroad: 

I do not know the answer others will make; but, for myself, 
it seems clear that the essential necessities of t'ne Allies must 
not only be met during the war, but for a sufficent time after 
the war so that their agriculture and industries may be rehabi- 
btaaci! : especially as such rehabilitation in northern France is 
largely neces.sary because of odious and tmnecessary destruction 
of property on a vast scale by Germany and heavy drafts upon 
the financial resotirces of those couiitries unwarranted by inter- 
national war. 

This war probably will cost hundreds of thousands, and it 
may cost millions of our men. It will require many billions of 
our treasure which will put a heavy burden upon succeeding 
generations. The dreadful costs of the war we must bear. 
Should we not therefore gain everything possible from the ex= 
|)eriences of the war? The vast savings due to more scientific 
prodtiction and distrri^ution, if continued after the war, will in 
large measure, indeed, they may completely, carry not only the 
interest load imposed upon us, but even a certain amount each 
year toward the liquidation of the principal. Without being able 
to demonstrate it. I believe it probable that if, following the war. 
wise governmental regtilation is continued not merely for the pub- 
lic utilities but for every essential commodity, the savings to the 
people will I)c sufficient to meet the money cost of the war. No- 
thing can compensate for the losses in men. 

FINDING THE PROFITEERS 

Albert W. Atwood in the Saturday Evening Post 
More Loose Talk Than Facts 
Tbe hardest thing which common sense has to contend 
with in thi-; world is lon-;(> talk, \agne charges, epithet*^ rathf-r 



38 THE UNIVERSITY OF OKLAHOMA 

than specifications — in short, too much lip. Millions of silly 
people jump at conclusions, express their minds in talk before 
they have any minds to express, and praise or condemn — chiefly 
the latter — out of hand. Talk is the universal curse. 

To one person who has actually traced or even tried to 
trace the costs and prices of commodities thru from producer to 
consumer to see whether too much is being charged, millions 
have shouted and accused and denounct. 

We are at once confronted with the absurdity of what has 
been calld "circular reasoning" before it is possible even to 
start the search for profiteers. There are those who say that 
prices have risen because wages have risen, and that wages 
have gone up because prices have gone up. Thomas Nast's 
most famous cartoon. The Tweed Ring, showed a dozen men 
.standing in a circle, each pointing a finger at his neighbor on 
one side and remarking, "he did it". Nor have cartoonists of 
the present day faild to show shrewdly many persons standing 
in a circle, each accusing his neighbor of being a profiteer. 

But the wage earner has no trouble in getting back at the 
manufacturer and pointing to the fact that in many cases wages 
lag behind profits and prices by at least sixmonths or a year. 
Hard prest, the manufacturer accuses the public of being ex- 
travagant, but the public laughs when it sees the enormous 
dividends the manufacturer is paying. Prest a little harder, 
the manufacturer, says the producer of raw materials is to blame, 
and even accuses the largest manufacturers, or so-calld trusts, of 
being the culprits. These largest manufacturers have very little 
trouble in proving that they sell goods more cheaply than the 
smaller ones. 

Every one of course takes a whack at the middleman, the 
jobber and speculator, and especially does the farmer go for 
them. But even these much despized persons have their in- 
nings. They have no difficulty in showing that what they take 
out as toll is the merest fraction of the cost, and that the mar- 
gin between wholesale and retail has if anything tended to fall 
instead of rise in a period of rising prices. Even the speculator 
is able to prove that in the long run he cannot artificially mark 
up prices unless other causes are about to produce a rise. Nor 
does the much-abused middleman — whether he be jobber, or 
the greatest middleman of all, the retailer — have much trouble 
in showing that without him both the farmer and consumer 
would be utterly helpless or else would have to perform his 



GOVERNMENT PRICE CONTROL 39 

functions with the added expense involvd. The processes of 
distribution are often wasteful, but they have to be effected. 

Not so Simple as it Seems 

It all seems very confusing and baffling. No wonder flip- 
pant people say that profiteering usually is what the other fel- 
low charges. But is not this definition more than flippant? For 
it is a deeply seated trait in human nature to take for granted 
that we are entitld to an increase in wages or salary, rent or 
profits whenever conditions permit. Each of us wants more, 
no matter whether we render services or not. But we are very 
particular that the other fellow should give full value for the 
money he receives. Everybody is eager to take advantage of 
rising prices, but feels aggrievd if any body else snatches the 
advantage awa3^ 

If is were not so serious, if most people were not openly 
rebellious at what they consider extortion, this passing of the 
buck would have its humorous aspect. The president of a 
great maunfacturing company recently accused the retailers in 
one of his mill towns of being profiteers. He threatened to open 
a cost-price store backt by the enormous resources of his com- 
pany to bring down the cost of living. In other words he is- 
sued an ultimatum to the merchants of the city, his object being 
to "stop this business of the industrial cat chasing its tail." 
All the increast wages which his workers got, he said, were at 
once absorbd by the merchants. 

When this executive visited the town to confer with the 
merchants great crowds of his own employees, who had hooted 
him a few years before during a strike, surrounded his auto- 
mobile and shouted their applause. But when he met the mer- 
chants they askt for an immediate show-down of the names of 
the profiteers, and presented figures to prove that prices were 
no higher there than in neighboring towns. Moreover they in- 
timated that the best way to bring down the cost of living was 
to begin at the source or f ountainhead ; and they askt about 
the profits of the company itself. People living in glass houses, 
it was suggested, should not throw stones. 

An important religious and educational organization which 
comes in close contact with wage earners recently receivd a 
complaint from the general manager of a large corporation in 
a New Jersey city. He explaind that since 1917 he had in- 
creast wages twice a year; that he had recently raisd wages 



4(1 THE LLNMVKRSIT^' OF OKLAHOMA 

aL;ain, hut was waited upon hy a committee of workmen vvlio 
said that the corner grocery had raisd prices, tlie landlord had 
increast rents, and tliat they were al)sorbing the increase in 
wages so that the workers were getting no benefit. This gen- 
eral manager said he had studied the situation for a good many 
years and blamed the merchants for deliberately raising the 
l)rice of goods when they learnd thru the public jiress of the 
raise in wages accorded the workers. 

"At our request" said a representative of tlie organization," 
the United Bureau of Labor ^Statistics made an investigation 
with three exijcrts in that NeAv Jersey city. They carefully in- 
vestigated tlic rise in prices and tried to discover some relation 
i)etween the advance in wages and that in prices. The result 
shuwd, however, that prices in that city were no different 
from those in surrounding New^ Jerse.v and New York towns, 
and that tlie raise in waues came after rather than before the 
rai-e in prices." 

Easy to Blame 

Local attorneys are hot after the profiteer, food administra- 
tors and ever}- manner of civic and consumers' organization are 
doing their iitmost to hunt him down. In addition to all thi> 
many cities have special commissions which have no function 
except to investi gate the cost of living. There is no dout as tc> 
the impopularitA' of the profiteer. • Everybody is against him, 
not so much because they can locate and punish him as because 
it is human nature to love to have a scapegoat. The man who 
liits his thumb with a hammer finds far more satisfaction in 
blaming his wife than he docs in finding fault with the hammer 
ft is natural impulse to feel that someone has abused and 
i?ougd us. 

Xo amount of education will persuade people that not only 
profiteering but even the almost countless instances o' laigc 
and reasonable profits wdiich so characterize the present period 
of prosperity are the result rather than the cause of high prices. 
This is a point on which practically every authority, whose 
opinion is entitld to any respect, agrees.* History reinforces it 
But it is the same old case as the thumb and the hammei". Yon 
cannot blame the force of gravity with any satisfaction to your- 
self, but w-e all enjoy finding fault with other people. We no 
longer burn our neighbors as witches, but wc are able still to 
call them names. When sugar went to 25c a pound it wa^ 
much more natural for a woman to sav. as I heard one remark 



GOVERN MEXr PRICE CONTROL 41 

■'This is a free country for skunks", than for her really to under- 
stand the sugar situation. "This talk of profiteering"', said a 
scientist who had licen investigating fires caused by spontaneous 
combustion, "reminds me of my friend who was riding in a 
trolley car which came to a sudden stop. He ask the motorman 
the cause of the delay, and after tinkering around a long time 
the motorman with relievd look on his face said, 'I guess the 
volts have got into the motor". That's the way with most peo- 
ple who are puzzld by the high cost of living. They are ignorant 
of its real and complicated causes, and some one shouts, 
'profiteering'. They all exclaim, 'Why, of course, that's it' and 
feel much relievd and satisfied"'. 

Busy Prosecutors 

When profiteers have been caught they have been so small 
and insignificant that no one could discover how their opera- 
tions had had more than little if any bearing on the situation. 
Consider sugar. Its high price has irritated the public more per- 
haps than that of any other commodity. Every district attorney 
in the country has been trying to run down hoaders of and pro- 
fiteers in sugar. The results have been practically nothing. 
According to the statement of a former food administrator 
who is now chairman of the fair-price committee in one of the 
largest cities of the country, five weeks of investigation by a 
corps of secret-service men faild to uncover a single profiteer in 
sugar. Finally when a few paltry speculators were discoverd 
all the newspaper reporters were calld in, but the sensation had 
evaporated into thin air as far as headlines were concernd. 

Perhaps the big culprits have escaped detection and punish- 
ment. They are better able to eniploy expensive counsel to de- 
fend them. I was told by a member of a firm of sugar brokers 
who had had an altercation with the local fair-price committee 
that the head of the firm would spend a million dollars in fight- 
ing the committee if the case were taken into court. Later, 
however, this same firm was publicily exonerated by the com- 
mittee, and in fact praisd for its conduct. 

r.ut iho ample means do help protect the guilty as a rule it 
is difficult to see how any amount of wealth could protect the 
culpable objects <if the present remorseless pursuit. Every 
political consideration renders it desirable, in fact necessary, 
for the authorities to make good in their efforts to run down the 
malefactors of high prices. Success would make votes and 



42 THE UNIVERSITY OE OKLAHOMA 

millions of them. Nothing would so satisfy the people of this 
country as to have hundreds of big profiteers in food, clothing, 
and rent adequately exposed and punisht. 

But that is not all. In many cases those who are in a posi- 
tion of authority are if anything far more sympathetic towards 
the laboring man than toward business enterprises. Not only 
is everything in a material wa}^ apparently to be gaind by cater- 
ing to the laboring man but many of the public officials are 
naturally and sincerely more inclined to that side of the fence 
than to the other. 

Not only do votes and honest inclination drive the prose- 
cutors on but they arc prodded by constant threats and com- 
plaints from labor leaders. "The only revolution impending 
in the United States". I have heard one of the most conserva- 
tive and reasonable labor leaders in the country maintain that 
garment makers were selling their goods from 200 to 300*7' 
higher than they needed to. 

Nor have the authorities shown any lack of zeal and ability. 
They have hit out hard, and besides the weapons of the law thej' 
have used the force of publicitj', and plenty of persuasion and 
tactful cooperation. Yet what do we see? The British Food 
Controller, tho a great friend of the working people, recently 
announct that the profiteer except in certain instances could not 
be found, and "if it were possible to abolish him altogether 
there would be no material effect upon the present level of 
prices." The head of a large community council of defence 
with 2,000 members told me that many of the members com- 
plaind of profiteering, but he could not cite a single example 
where it had been found. 

Says John H. Sherburne, the chairman of a commission 
which spent half a year in investigating prices in Massachusetts: 

"The average fair-price committee is loaded for profiteers. 
Just what a i)rofitccr is everybody has a different opinion. 1 
have had at least eighteen different ideas in the six months I 
have been at work. We have hunted and cornerd them and 
thought we had one with his horns already to be mounted, but 
when we finall}' came to apply the last knife, in some way or 
other he has provd that he really was doing about as an ordinary 
American citizen would do under ordinary circumstances." 

No one can accuse Royal Meeker, United States Commiss- 
ioner of Labor Statistics, of being unduly prejudist in favor of 
capitalists; but Mr. Meeker in si)cakin,L; of the profiteer says. 
"His influence in boosting prices is negligible. If all the pro- 



GOVERNMENT PRICE CONTROL 43 

fiteers in the world could be apprehended and thrown into jail, 
or lined up and shot it would have no appreciable influence on 
prices." 

Nothing which has been said in this article is intended to 
disprove the existence of an enormous scale of profit making. 
Profits which before the war would have been considerd not only 
exceptional and abnormal but even extortionate are now almost 
universal. Nor is there any denyinij; that many classes of busi- 
ness men are running literally wild in the matter of both prices 
and profits. They seem to have lost their balance and standards 
of normality. Many people, even leading business men, con- 
sider this profiteering, and will even admit their own part if you 
do not quote them. One of the leading textile manufacturers 
in the country writes me as follows : 

"In my opinion profiteering is being practist universally, 
I might say without exception, among manufacturers, retailers, 
jobbers, commission men, and especialh^ dealers in raw mater- 
ials. All of the above mentioned business interests are exact- 
ing abnormal profits. 1 am free to confess that our profits are 
exceptional, yet we have the reputation of being the most reas- 
onable in prices of any manufacturers in the country, and con- 
siderably below the market at all times." 

If this statement is accurate as it stands, without modifica- 
tion, then the acid of greed has almost eaten away the moral 
foundations of our national life. I am not prepared to admit 
that such is the case without delving deeper into the causes and 
meaning of this universal condition which the manufacturer des- 
cribes. No one should use the word "profiteering" without 
deliberately intending to imply censure and and a lowering oi 
moral standards. Because profits today seem abnormal and 
exceptional by prewar standards it does not follow that the 
country's ethics have been shot to pieces. 

In the first place it is important to distinguish between ex- 
travagance and profiteering. Large profits on articles of stand- 
ard make may be profiteering when they represent only a nor- 
mal return on luxuries or articles of extreme style. If a shoe 
manufacturer charged the Government as much for a regula- 
tion last of army shoe as he does the dealers who distribute 
fancy-top creations whose style changes every year he would 
be a profiteer. Two women went to the chairman of the fair- 
price committee in New York and complaind because a hotel 
had charged them $18 for Russian caviar. Of course they were 
shown out of the room, for the purchase of caviar is optional. 



44 THE UNIVERSITY OE OKLAHOMA 

It is not a necessary of life. If a merchant can induce people to 
paj' $200( for a pair of unusual silk stockings, or $110 for a cig- 
arcte holder it is altogether a very private matter which does not 
concern the public, no matter how many thousands percent the 
merchant maj^ make. 

In one city the fair-price committee set out to reduce the 
cost of living in what has always been considered the poorer 
section of the city and one that is much visited by tourists. A 
shoe retailer in these supposed slums at the instance of the 
committee put on sale a large number of plain shoes on an 
army last to retail at $5.50. He could have made a good profit 
at that price but none of the residents of the section where he 
is located would buy the shoes and he had to move them finally 
at a mucli lower in-ice and onu which resulted in a heavy loss. 
Meanwhile he put on sale some fancy shoes at $16 and .old 
them at a big profit. 

When you or I go to a store and find that the price o! an 
riiticle has advanct our first instinct is of annoj'ance or '>ven 
anger. But how about the merchant? Have his expenses re- 
maind stationary? An old German butcher at Christmas time 
said that he remembered when he bought turkeys wholesale at 
ten cents a pound and sold them at fourteen. "Nobody kickt 
then. Now I buy at fifty-five cents and sell at sixty-two, and 
my customers call me a profiteer." 

Of course what we see going on universally is a very simple 
thing, an efYort on the part of everj'body to pass on to his 
customer the increast cost of what he himself has to pay. In 
other words everyone is trying to' escape the penalty of the 
war and the decreast purchasing power of the dollar which has 
followd it. The war was a great calamity. It is supposed to 
have cost fully $340,000,000,000. It resulted in the destruction 
of property, a scarcity of goods and lal)or, the demoralization 
of the markets am! \hv laws of trade, and a vicious inflation of 
credit and currency. In all probability' this nice little bill will 
have to be paid for, but those who are able to raise their wages 
or profits cnuf are simply passing the buck to someone else. 
It is iiot so much a reprehensible thing, ethically considered. 
as it is a frantic cft'ort to postpone the dreaded day of reckon- 
ing. 

One of the chief reasons for the high price of shoes, clotl' 
ing. and the like is the almost universal and for the most part 



COVERNMENT PRICE CONTROL 45 

amazingly succcSvsful effort of dealers to get into the lucky 
class and keep from having their pockets pickt by the next great 
sweep in prices, which they fear will be downward. Or, to be 
more technical, I refer, of course, to the widespread practise 
of all the dealers involvd of selling goods on the basis of what 
it will probably cost to replace them rather than what it cost 
to buy them. The public has no conception, nor can any 
language of mine convey an idea, of how serious a factor this 
custom has been in pushing up prices. The practise has be- 
come far more general than ever of selling goods not on a 
basis of a fair profit added to the actual cost but on a basis of 
the probable or feard cost of replacing them. In other words 
almost every dealer in goods has lieen playing safe with a 
double margin. .Vs one merchandise manager says: 

"If a thing costs $2 todaj' and is going to cost $3 next 
spring the retailer is apt to price the goods which he now has 
in stock on the basis of a cost of $2.50 or even $3. He will 
tell you that the market price will come down and he must 
mark his goods somewhere near their replacement value, and 
he must make greater profits now to take care of the losses he 
may swallow in case the market goes back from $3 to $2. Now 
tlie retailer figures that way, the jobber figures that way, the 
manufacturer figures that way on his raw material and even 
liis labor, and the producer of cotton figures that way. You 
can see that everybody is carrjang his goods as tho he were 
riding for a fall, and where he has been doing that for the last 
two and possibly three years he has been making a lot of 
money and getting more than normal profits on a great deal 
of his merchandize." 

Uncertainties of the Future 

Dealers are afraid that prices have gone so high that the 
public may soon rebel and refuse to buy anything except food. 
Of course the wave has a crest somewhere. Prices cannot rise 
forever without a smash-up or a panic of some sort in which 
many dealers in goods would go on the rocks. To protect 
themselves against this possible slump later on they have been 
stretching their profits to an extent which were it not for this 
fear would be beyond all reason. The astonishing feature of 
ihe situation is brought out strikingly in the following state- 
ment from a textile manufacturer: 

"Conditions under which we are all (Uiini; business aie uiii- 
lalizing, full of uncertainties, and everybody is looking for the 
day when the top will have been reacht and when the slide 
will begin. This is, of course, a natural business instinct. This 
feeling of uncertainty started with the first advances, and the 



46 THE UNIVERSITY OF OKLAHOMA 

general policy has been for everybody to take all the profits 
they could get, clean up, and be ready for the drop. However 
this has been going on for about six seasons, and prices are 
still going up, with everybody taking the additional profit each 
season." 

It is not literally true, of course, that all goods are being 
sold on this basis. Many of the larger and stronger concerns 
are able to sell at least part of their merchandise at prices 
proportionate to their original cost. Nor are business men by 
any means agreed that it is wholly proper to mark all their 
stock up to the replacement costs to that they fear for the 
future. ... A certain very large steel company is reputed 
to have kept the price of a product $3.75 tho the smaller com- 
panies were selling at $4.50. Meanwhile jobbers were said to be 
buying from the big company and loudly praising its modera- 
tion and public spirit while at the same time selling to retailers 
as if the cost had been $4.50 to them. A furniture manufacturer, 
after describing in detail the reasons why prices of furniture 
have risen, remarkt with point and accuracy: 

"Yet the demand still keeps up, and remember that it is 
not cheap furniture but expensive furniture. For my part I 
can hardly understand such an excessive demand at the pres- 
ent prices except that with everything else advancing in price 
nine people out of ten have made money and for four or five 
years during the war they did economize and consequently now 
feel able and can buy." 

Another bad feature of a scarcity or seller's market is that 
prices which consumers pay of necessity lag behind producers' 
prices. Even when hides have fallen in price and cattle on the 
hoof bring the farmer less than before we must from the very 
nature of the case continue to pay high prices for shoes and 
beefsteak. Call the packers, manufacturers and all the rest of 
them buccaneers if you will, but that does not alter the fact 
that it takes from six months to a year to work thru from 
raw materials to finisht goods. Therefore the high prices of 
many raw materials of last summer will not be and cannot be 
fully reflected in prices to the consumer immediately. 

The Crushing Burden of Taxes 
One of the chief reasons why the older standards of profit- 
making have been abandond is the effort of business men to pass 
on to others the enormous burden of taxation incident to the 
war. Many authorities even contend that the present excess- 
profits tax is the keystone of the arch of high prices. It was 



GOVERNMENT PRICE CONTROL 47 

the evident intention of Congress to make the stockholders of 
rich corporations bear his tax. But for the most part the 
corporations — and everyone else in business for that matter, 
includingall the small dealers and retailers — have been suc- 
cessful in passing the tax on in the form of higher prices for 
what they have to sell. Congress and the public generally 
had the idea that an excess-prolit tax was in some way a device 
to check profits. But in reality it has enlarged them. Taxes have 
always been and probably always will be considered an ex- 
pense of doing business, just like interest charges on borrowd 
capital or fire insurance. . . . Each member of the distribu- 
tive chain from the producer of raw material to the retailer^ — 
and there may be a dozen of them — feels obliged to make ample 
allowance to cover the tax. In this case it is not the man who 
is to blame, it is the tax. But the allowance for the tax grows 
as it is passt on. It becomes like the snowball rolling down 
hill. It is one of the most vicious links in that endless chain of 
the high cost of living. In one study of the effect of the tax 
on prices it is estimated that one to fifty excess-profits taxes 
are included in everv article sold. 



KEEPING DOWN FOOD COSTS 

By Harry C. Douglas 

Former Editor of the "Sydney Times" 

Stale cunlrol of food and necessities need not be the deli- 
cate and diiticult problem that friends of the old, happy-go-lucky, 
laissez-faire school would have the public ])elieve. Many apolo- 
gists for unrtstricted individualism postulate that our whole 
social order would totter upon its foundations if a few callous 
speculators in food and fuel, with all the instincts of ravenous 
wolves eyeing a defenseless fiock of sheep, were to have their 
unnatural greed curbd in the interests of the greater public at 
large. It may be argued that the wolves are well able to look 
after their own predatory hides in any case ; it may be asserted 
that the only safe procedure is to legislate against, and not for, 
them; leaving aside theories, there remains the timorously art- 
vanct suggestion that perhaps any adoption of national— or 
state — control of the necessities of life savors too mucli of the 
Utopian, the socialistic, the impractical. To this there is one 
certain answer : "It has been done. It is lieing done now — and 
ii works." 



48 THE L:NlVERSirV OF OKLAHOMA 

Must Kiiropuan nations luivc put food and otluT commoditii.s 
under government control, their action was dic'ated by a set of 
ahnornial circumstances. But Australia lia? lackld the same pro- 
lilem under conditions very nearly a])pr()xiniating those in the 
L'nited States. When tlie \v;ir l)roke out, a group of .\uslralian 
si)eculators got very l)usy . indeed. Tlicy tliought lliey saw a 
spleridiil op,])ortunity to send the prices of food ;ind necessities 
slvy-rocketing to unheard of heiglus. So they started in to corner 
supplies, firm in the Ijelief tiiat if they could n..u "hold up" then- 
own people, at least England would he glad to pay their extor- 
tionate prices. Their case looked a pretty- sound one — to them. 
There did not seem to 1)e a tiaw in it. But they had over lookt 
one thing — the lal)or government. The lal)or government had 
not overlookt anytliing, not even the fcjod speculators. The laiwr 
governuKut had had a very wary weather eye focust upiju the 
speculators from the Ijcginning. .\nd so the cards were stackt 
;igainst the food gamblers, the long-suffering wheat pool nun. 
who only found out whtTi it was too late. 

.\t tliat the speculators had workt with great efficiency and 
despatcli. They had lost no lime. As soon as the dogs of war 
were unleasht, up soard the price of wheat — thirty cent.s a bushel. 
Soon tlie vicious circle was completed. The flour manufac- 
turers l:ooste(l tile price of tlieir product. The n-iaster bakers 
playd ducks and drakes with the public's l)rea(* supply. The 
grocers, faithfully tagging along behind the bigger men, joind in 
the orgie of price boosting. The situation was much as it was in 
New York last fall and early winter, when the cost of fuel, the 
cost of milk, the cost of groceries — in fact, the cost of everything 
people had to have — I)egan the upward climb fhat ended by thoroly 
ar(jusing the public to tlie need for i)rotecti\e, i)rohibitive legis- 
lation. 

Less than a month after the price-boosting sharks got busy. 
the labor government of New South Wales got a little busier. 
It pland, drew up, passt and put on the statute books its reply. 
.\nd that reply was a law authorizing the appointment by the 
<;overn(ir of the Slate of a Necessary Commodities C(Mitrol 
("onunission. in wliich was vested practically unlimited powers to 
li.x the niaximum i)rices to be chargd for nearly everything ex- 
cejU limousines, steam yachts and Turkish carpets. "Necessary 
commodities" was given a wide interpretation, the term being 
lield to include all fuel, gas, whether supplied to householders 
or manufacturers — all articles of feiod and drink, and the ingre- 



GOVERNMENT PRICE CONTROL 49 

(licnts used in making such articles, and, rtnally any article which, 
after investigation, the commission might persuade the- govern- 
ment to add to the list. A daily bulletin lixt the maximum jirices 
tor necessities within the act. 

It was recognized that some .speculators, bolder i - more de- 
fiant than the rank and file, might go ahead and charge their 
own prices despite the fixt dead lines; that others might retaliate 
hy withholding the supplies they had accumulated. The labor 
government provided against these contingencies liy ordering a 
penalty for such evasions of the strict letter of the law. Any 
offenders- faced a fine of almost $500 for each offense, a year 
in jail^-or botli. The commission was erapowerd to enter forcibly 
any premises of suspected persons. 

The scheme workt like a charm. The folhjwins mices ruled 
the day l)eforc the first price-fixing governmental Ijulletin was 
issued; wheat, $1,26 per bushel; flour, $56.01 per ton; bread, on 
the point of l)eing boosted from seven to nine cents for a 2-pound 
loaf. After the bulletin was issued the prices were: wheat, $1 
per busiicl : fitnu". $46.37 per ton: bread, orderd to remain at seven 
cents. 

In New South Wales, after the appointment of the commis- 
sion, butter fluctuated in price between 35 and 40 cents a pound. 
In the neighboring State of Victoria — which is the only state in 
Australia that has not a labor legislature, and which had no food 
control conmiission — -Ijutter was around 60 cents a pound. 

The New South Wales Government went even farther in its 
determination to enforce obedience from recalcitrant speculators. 
A group of the biggest operators in the state had 400,000 bushels 
of wheat stored on the water-front ready for instant shipment 
to London. The Governor issued an order in which the specula- 
tors were named, and which gave the state power to seize the 
wlioJe consignment. Directly after this drastic action the whea', 
speculators threw up the sponge ; some 3,000,000 bushels of wheat, 
held for huge profits; were put on the market at the legally fixt 
price of one dollar a bushel. That lircike the back of price- 
boosting. No one wanted to "sit in" such a losing game. To 
cap the climax, tlie government enterd upon a scheme of state 
bakeries. 

Practical socialism has gone a long way indeed in New South 
Wales. The state owns and operates a fleet of trawlers, which 
bring plentiful supplies of fish into Syndey some three times a 
week. Furthermore, the state owns and operates a chain of fish 
stores in whicli are marketed tlie catches of the government 



50 THE UNIVERSITY OF OKLAHOMA 

trawlers. Prices chargd, of course, are just enough to cover oper- 
ating expenses. An inexhaustible quantity of wholesome, palatable 
food is thus assured the people at all times of the year. Drouths 
on the sheep and cattle "stations" need worry the general public 
only in a ge neral way. The troubles of butchers are their own 
affair. "We'll make every day Friday if we have to", one man 
said to me. So well is the scheme working out that the minister 
responsible for it recently informd the government that a fur- 
ther $500,000 would have to be spent to buy more trawlers. 

A unique innovation— even for Australia — was the establish- 
ment lately in New South Wales of a Fair Rents Courts, to which 
all tenants who believe they are being mulcted by grasping 
landlords may take their tales of woe. At the opening of the 
court, D. R. Hall, State Attorney-General, said. 

"The experiment which begins today will be vvatcht with tht 
keenest interest, not alone in this state, but thruout Australia, 
and, indeed, the older countries of the world. Students of social 
problems, not less than rack-rented tenants, will interest them- 
selves in the history of this court." 

In the very first case tried in the court it was laid down by 
the presiding judge that a return of six per cent upon his invest- 
ment was all that the landlord had a right to expect. 

Railways, street car and telephone systems, and otlur jtublic 
utilities are publicly ownd. The number of private franchises for 
public services in Australia is an ever diminishing quantity. The 
state of Queenland has gone into the brewing and hotel business ; 
at least, it probably has by now — the scheme was well on its way 
to realization when I left Australia a few months ago. The pub- 
lic do not get service at remarkably cheap rates-not because muni- 
cipal and state ownership has provd a failure, Imt because the 
cost of labor is so high. There is no doubt, Iiowever, that the 
public are servd more cheaply liy their o\\ p. government than I)y 
tlic old private companies. 



WHEN WILL PRICES DROP? 
From the Brooklyn Eagle? 

When people refuse nr are unal>Ie to buy at high prices. — 
A. lUirlon Hepburn. 

When pul)lic curtails purchase and consumption of things 
they can do without. — .A. R. I'.rskine, i)resident Studebaker cor- 
poration. 

When buyers refuse to pay unreasonable prices. — (ieorge F. 



GOVERNMENT PRICE CONTROL 51 

Johnson, president Endicott-Johnson corporation. 

When we increase production, stop speculation and reduce 
consumption. — Earl D. Babst, president American Sugar Refining 
company. 

When manufacturers reduce prices when production costs 
permit. — E. H. Endicott, president Endicott-Johnson corporation. 

When we increase our production and the efficiency of our 
labor. — Wm. M. Wood, president American Woolen company. 

When everyone works harder and possiltly longer hours, — J. 
Ogden Armour, president Armour & Co. 

When people give a fair day's work for their very large pay. 
— James H. Post, president National Sugar Refining company. 



PRICE FIXING IN OTHER DAYS 

The following are not the words of a present day news- 
paper, nor of a Washington publicist attacking the cold storage 
plants or the beef trust, but are drawn from an edict of the 
Emperor Diocletian, used in 301 A. D. 

"For if the raging avarice, without regard for mankind, in- 
creases and develops by leaps and bounds, inasmuch as there is 
only seen a mad desire without control to pay no heed to the 
needs of the many, it seems good to us, who are the fathers of 
the people, that justice intervene to settle matters impartially. 
Who is of so hardened a heart and so untoucht by a feeling for 
humanity that he can be unaware that in the sale of wares which 
are exchanged in the market an exorbitant tendency in prices 
has spread to such an extent that the unbridld desire of plunder- 
ing is held in check neither by abundance nor by seasons of 
plenty? It is our pleasure, therefore, that those prices which the 
subjoind written summary specifies be held in observance thru- 
out all our domain, that all may know that license to go above 
the same has been cut ofT. It is our pleasure that if any man 
shall have boldly come into conflict with this formal statute he 
shall put his life in peril." 

So Diocletian fixt the price of wheat 33.6 cents a bushel, of 
beef 4.9 cents a pound, of pork at 7.2) cents, of butter at 9.8 cents. 
Coincidentally he fixt the wages of unskild labor at 15 cents a day 
and of skild artisans at 30 cents. To secure the 6 bushels of 
wheat a person consumes in a year, it was necessary for a laborer 
to work thirteen days of twelve hours, whereas now the laborer 
can buy six bushels of wheat with the wages, at $3 per day, of 
four and one-half days of eight hours. 

During the Civil war, wheat, tho no prices were fixt, 
was about $1.50 per bushel, rice 8 1-2 cents a pound, sugar 14 1-2 
cents, coal $8 a ton, but meats, butter, eggs, potatoes were much 



5i THE UNIVERSITY OF OKLAHOMA 

luwcr than now. W^ages were $1.00 to $1.25 a day for men, 
$8.00 a nioiilh for house workers. How our grandfathers suc- 
ceeded in makint; ihcir wages meet the then i^rices seems a mir- 
acle, now. 

In France, in Ckrmany. in England price-fixing under the most 
terrific penalities has heen tried and has invariably faild. When 
the level fixt was low, gardeners refused to produce and scarcity 
was intensified. When the level fixt was high, production was 
so stimulated that soon surplus outran demand. Actual prices 
fell to non-remunerative levels and there was a great depression 
of the agricultural industry, and, thru it, to all other industries. 
In 1793 France passt "The Law Maximum" and the guillotine 
was used on i)rofitcers, but revolutionary democracy was no 
more able in control prices than was an all-powerful Roman 
emperor. 



JAIL THE PROFITEERS 

By Sen. Arthur Capper 

From Speech in the U. S. Senate 

After reading a telegram from the National Wool Growers' 
association as to the prices the producers are receiving from 
wool, Senator Capper said ; 

Mr. President, this statement is of more than ordinary in- 
terest when considerd in connection with the latest official report 
of the national conference board, which brings the startling in- 
formation that from July 1, 1914, to November, 1919, cost of 
clothing has increast 135 per cent, tho food stuffs incrcast only 
92 per cent, fuel 48 per cent and rent 38 per cent. 

Menace to Business 

.\nxiety concerning the continuous advance in prices is re- 
ported general in American business circles by the Federal Re- 
serve Board's recent review of business conditions. It may well 
be. The prevaling high prices are rcferd to in that report as an 
unquestionable menace.' This report virtually admits that ex- 
cessive profit taking is beginning to menace business itself, to 
kill demand. 

Just now tile CDimtry condennis labe>r in unsparing terms for 
its exactions, but llu evidence is overwhelming that the cause of 
the expensive' cost of living is not labor wholly, but profits. It 
is true that labf)r demands all it can get that it may live. l>ut liig 



GOVERNMENT PRICE CONTROL 53 

liusiutss. lo-a great extcnl. keeps on getting and the helpless con- 
Miincr i)ays. After tlie labor is paid, profits mount to unheard of 
heights. 

Public Being Sand-Bagd 
Can We (h)uhl lliat the general public is l)eing sand-bagd 
wIkuwc know such facts as these: The net profits of the 
American Woolen Company, after federal taxes had been deduct- 
ed, were ?2.77S,600 in 1914; $7,160,295, in 1915: $8,210,761. in 
1916; $15,664,985, in 1917, and $12,324,084. in 1918. All on an in- 
vested capital of 22 million dollars. The earnings on its common 
<rock were $10.80 a share in 1915: $27.05 a share in 1916; $47.62 
.1 -hare in 1917, and this year; according to best Wall Street in- 
inrmation, will exceed $100 a share, or more than the stock's par 
\ahie. A \ear ago the watcrd stock of the American Woolen 
e. luipaiiy. the chief textile company in the United States, was 
([uoied on the stock exchange at $45. Today it is close to $150 
and in recent weeks has been quoted at $156. 

Woolen Company Cleans Up 

For the wool that goes into a suit of clothes which sells for 
$100, the wool growers receive $7,37 saj^s the wool growers' as- 
sociation. This makes the finisht garment cost the consumer 
niiire than 12 times the price of the raw material. The price of 
clothing has made enormous advances and is still advancing not- 
withstanding the American Woolen company cleand up net pro- 
iils of 56 jK-r cent in 1917 and in 1918. or 2 million dollars more 
titan the 20 million dollars total of the company's authorized out- 
standing stock. 

Cotton Gamblers Score 

There can be no real shortage of cotton with a crop of 11 
million liales added to 3,600.000 bales left over from 1918. 1)ut it 
is a common occurrence, I am told, for the speculators on tlie 
cotton exchange to boost the crop value 50 million dollars in a 
single day. In one week, during the crop year, they actually in- 
ireast it one-half billion dollars. 

Said the Monroe (N. C.) Journal a few days ago: "Cotton 
manufacturers are making from 100 per cent up on their invest- 
ment, and several have not only duplicated their plants in one 
year but paid a dividend also. 

Raw material and manufacturing Itrings the cost of yarn to 
aliout ?0 cents, selling at $2, or at a profit of 150 per cent." 

The value of a singU- load of cotton advanct $131.25 at 
I'boenix. Ariz., in a recent week while the load was l>eing 
i'.eighd. Ti> this . ii. .rmc oi- '-iH'cnlaiix-e margin tlie mills and id'- 



54 THE UNIVERSITY OF OKLAHOMA 

bers add a margin of profit more than ample to meet all contin- 
gencies. Therefore is it any wonder that sheeting now costs 
nearly as much a yard as silk used to? 

Where Shoe Money Goes 

A 50 per cent increase in the price of shoes by next summer 
is predicted by the president of the National Shoe Travelers. 
The day this prediction appeard another extra dividend was de- 
clard by the Central Leather company. The common stock of 
this company was rated at $58 a year ago. It is now quoted 
around $105 and a large issue of new stock has recently been 
added. While the people contemplate going barefooted the 
leather trust walks on velvet made thicker. A year ago it was 
the war demand for leather that made shoes high. Now it seems 
to be the peace demand for velvet. 

At a time when shoe manufacturers have issued announce- 
ments of still higher prices for shoes, the report of one of the 
great leather corporations shows profits earnd of 52 per cent on 
the stock. The stock of most of such corporations originally did 
not represent strictly, dollar for dollar, the money invested, but 
a good part of the stock represented earning power. A great 
deal, or most of the so-called water in security issues stands for 
what the organizers believd the concern would earn at a fair 
dividend rate. But 52 per cent is not a fair rate of return on 
such watered capitalization. As long as unrestricted prices of 
stocks are in Wall Street we must be prepared to pay robbery 
prices. 

A year ago the stock of the Crucible Steel company was 
quoted at $52. Today it is quoted at $209, and has recently been 
as high as $261. Before this country enterd the war the Cruci- 
ble Steel company never earnd a dividend on its waterd stock. 
The quotation shows what the best opinion is of its earning 
power. 

Enormous Profit in Steel 

Mr. President, while we were sending the boys to France, 
eating war bread and conducting all kinds of drives to win the 
war, the United States Steel corporation made $1,300,000,000 net 
profit. The price of steel common stock, worthless at the be- 
ginning, soard to values of unbelief. 

We have 4 million homeless people in he United States as a 
result of the melon cutting in lumber. There has been and is 
shameless profit in that industry, yet weekly advances of $2 to 
$5 a thousand arc not uncommon. 



GOVERNMENT PRICE CONTROL 55 

Regarding Price of Lath 

Relative td proiits in lumber, a reliable Kansas lumber deal- 
er writes me : "Ten months ago the wholesale price of the best 
grade of lath was $5.30. We are selling lath to trade today at $10 
a thousand, altho by the inclosed new price list showing lath at 
wholesale, lath is now quoted to us at $17.25 and $18.25 a thou- 
sand f. o. b. this place." 

"I begin to think the only way out is for the public to stop 
buying. I would much sooner lock up and lay off for six months 
than continue business under present conditions. So I think it is 
up to the government to advise the people to stop buying. The 
1)ig five don't get all the hogs to slaughter." 

Here is an increase of nearly 250 per cent in 10 months on 
tlie war price of a staple commodity. In shameless and reck- 
less greed the knnber barons now lead the procession. 

Mr. President, the market price of the farmers' livestock has 
declined nearly 50 per cent, liringing many farmers to the verge 
i)f l)ankruptcy, but the high prices the consumers pay for meat 
arc virtually unchanged. This is particularly true of pork, of 
which we have a surplus of more than 1 1-2 billion pounds pro- 
duced last year, besides large quantities in storage. 



Profiteering in Coal Also 

The Fuel .\dministration restricted the advance in wages 
asked for by the striking bituminous coal miners to 14 per cent 
liecause at that per cent the consumer would not have to be fur- 
ther taxt for his coal. Nothwithstanding this estimate, carefully 
based on facts, Chicago coal dealers and perhaps others have 
since advanct the retail price of coal 60 cents or more a ton. I 
have a telegram today from Leavenworth, Kan., that the public is 
being compeld to pay the 14 per cent increase. The income tax 
returns prove the mine operators get excessive profits. During 
the recent strike it was shown that miners' wages in thesoft coal 
field were not excessive. But very little or no information what- 
ever was disclosed in regard to the actual profits of the operators, 
which still are known only to themselves and the bookkeepers. 

Mr. President, all the quotations I have referd to conspire 
to prove that it is profiteering in manufacturing by the great 
industrial corporations that has sand-bagd the public, rather than 
by merchants who deal directly with the consumer. It goes be- 
hind the retail i)rice. No doubt there is price gouging by some 
(if tile retailers, Ijut it is the price of goods when they leave the 
lactory to which the administration's best attention should be 
first directed. 



56 rilE ITNIVERSITY OF OKLAHOMA 

Gougers Are Getting Bolder 

..'I'liosc ;-;igantic corporations have l)cconu' dnink witii un- 
ruiiscionaljle profits extorted from a too compliant public. 

"The outstandini^ Tact is that there is nowhere the slightest 
indication of anj- change in the strategy of the great trusts, com- 
l)ines and industrial corporations in fattening their profits. A 
thief has only to steal half as much property these days to com- 
mit grand larceny, liut it seems a profiteer corjjoration may take 
all it can get from the i)eople and then make tiiem pay its war 
taxes besides. 

"ProsLCUtion of 179 profiteers in 1<S states already has been 
started liy the Department of Justice since a penalty was added 
to the i.ever Act. In some cases fines and jail sentences have 
l)ecn im])oscd. Of the victims of gfivernmental harshness one 
was fined $100 and given a brief stay behind the bars; another 
was fined $260 and given three monvlis. and tiie thinl had a fine 
of $5,000 and five months in jail administerd to liim. These tiiree 
martyrs were lioarders. 

"Mr. President, the Department of Justice is to be higliiy 
commended for its efforts to stafiip out Bolshevism. It took 
the governinent secret service just a few weeks to round up and 
l)ut in prison 4,500 reds. And when it comes to profiteers, the 
reds are in a iiitiful ininority. I am glad to see it is now pro- 
posed to have the secret service raid the profiteers, the most 
l)otent promoters of anarchy ue have. If this raid is ])r(i- 
euted with the same vigor and inickt up by the imprisonment oi 
profit extortioners it will have a most wholesome and salutary 
result. 

Put the Gougers in Jail 

"We deport the reds, and 1 heartily apiirove tile govern- 
ment's efforts in that direction, but the chief troulde makers, the 
price gougers, we still let run wild. If we were to i)ut half as 
many iJiofiteers in jail it seems to me, we should be in far less 
• langer of contracting liie red flu of I'olshevism. ( )ur greatest 
l)resent menace is anarciiistic greed here at home. For three 
years we have premittcd greed to do its worst to the devoted people 
who are the backbone of this nation and who must be an ever- 
present help in time of trouble. In that time we have made 
18,000 brand new millionaires. We now must stop this thing .soon 
or be prei)ared to take the consecpiences, not knowing just what 
those consequences may be. 

"We seem to lie inirtering not only our peace of mind but 



GOVERNMENT PRICE CONTROL 57 

all (jiir . tine prospects for hettering our condition ur serving 
mankind for this miserahlc mess of pottage. And probably no 
other nation ever had so unparalleld an opportunity. 1 am con- 
■^tantly surprised that so little account is taken of the wrath that 
i> stirring among the people at this continuous and widespread 
phindering. Washington must soon show it has the nerve to deal 
with these wreckers or must itself reckon with the people. Our 
government must prove to them its adequacy to govern, must 
prove worthy of its stewardship, or lose their confidence and 
rtsjiecl. 

"1 earnest!} urge as a remed}- to meet this emergency an 
active prosecution of profiteers, followd l)y their imprisonment, 
•■'■;d a law requiring every manufacturer to attach to every artic- 
he produces the exact price he receives for it. I am confi- 
dent nothing else will so quickly reduce and stabilize prices and 
rei^.^re lousiness and industry to a safe and sane basis. 

"Unless we make a real eflfort to control this orgy of greed 
shall continue to drift toward the rocks and no one can forc- 
what lookt for or unlookt for disaster mav occur." 



WHAT HAPPENS IN THE DARK 
Marketing Costs — Some Necessary, Others Useless Waste 
From the Country Gentleman 
It may not be exactly proper to speak of the gap between 
■ 'ilucer and consumer as "dai»V." but the means by which a 
dollar bushel of potatoes is miraculously changed into a three- 
'lollar bushel,' and a seven-cent quart of milk becomes over- 
-ht an eighteen-cent (piart, are of such consuming interest as 
lo suggest the desirability of a little more light on the interven- 
ing proc-esses. 

Recent high prices for iood products have provoked much 
>c talk a1)out marketing and marketing co.sts, and practicalh 
ry person who comes in contact with foods, beginning with 
' producer and going straight down through l)uyer, shipper, 
iran.sporter, broker, commission man, jobber, retailer and includ- 
ing the consumer, has been charged with undue extravagance and 
waste in running up the final price. 

Now the fact of the matter is tluit, percentagely speaking, 

marketfhg and di.stribution costs are but little higher than they 

!e in 1914. Certain factors of cost have even been reduced 

recent vear<. But the further fact is that, taking our market- 



58 THE UNIVERSITY OF OKLAHOMA 

ing and distribution system as a whole, it is so utterly inefficieni 
and so full of losses anrl wastes of a multitude of different kinds 
as to merit most of the cutting criticism it receives. 

The much-talkt-of road between producer and consumer is 
not a road at all. It is nothing more than an elaborated cow path 
that wr.nders more or less aimlesly among a maze of natural and 
artificial obstructions, inherited from the days when roads were 
not dcsignd to facilitate travel but luerely led past certain strate- 
gic points. Regarding the marketing of perishable foods, one 
of the largest wholesale i)roduce dealers outside of New York- 
City says : 

"It is simply a case of a number of individuals and com- 
panies operating independently on a speculative basis, each one 
trying to outguess the others as to how much he can clean up 
on a particular deal, whether it be onions, cabbage, potatoes, 
cantaloupes, oranges or lemons. The most intense kind of com- 
petition prevails in both the selling and buying ends, so that 
prices are forced up at loading stations and profits often reduced 
to losses after goods arrive to be sold. In other words, the 
tremendously important business of distributing perisable foods 
adequate to supply the wants of large cities is practically nothing 
more than a gambler's game, in which the players stand up to 
the taljle and play the red, the black or the blue. If they are 
lucky they win, and if unlucky they lose, and in between the con- 
sumer pays the fiddler." 

Piling Up the Burden 

This well-known dealer cites, specific instances of jumps in 
prices of cabbage of twenty to thirty dollars a ton overnight, 
potatoes fifty to seventy-five cents a hundred pounds, and many 
other similar wild fluctuations. He continues : 

"The reason for this is that the majority of car-lot jobbers, 
having all guesst the same thing at the same time, brought in a 
superabundance of these products. The market would not absorb 
this quantity, weather conditions became unfavorable, perhaps, 
causing the goods to deteriorate, and everyone made strenuous 
efforts to unload, taking heavy losses. In alwut another week 
this situation had changed, the market had cleaned up, and be- 
cause no one had nerve to go back again and play the same lead, 
there was not sufficient cabbage, potatoes or onions rolling into 
the city to supply the needs of the market, and immediately the 
jobbers ran the prices up, claiming the law of supply and demand 
forced them to do it. These variations are not chargeable to 
the law of supply and demand, l)ut to the anarchy and chaos of 
individual competition." 

The illustration cited shows merely one stjurce of loss and 
useless expense in but one step in the marketing procss. Losses 
start right back nn the farm and in the orchard through poor 



GOVERNMENT PRICE CONTROL 59 

liarvesting methods, careless handling, improper packing, lack of 
grading, and exposure to the sun or frost during transporta- 
ti(Mi, thru improper loading, use of unclean and unsuit'ed cars, 
lack of ventilation in cars, failure to ice at proper intervals, de- 
lays in transit, delays and damages in switching, and rough 
handling at the terminal market, thru lack of unloading 
facilities, antiquated storage and warehouse facilities, scattered 
freight yards, losses by theft and breakage during cartage, and 
congestion of the market district ; at the wholesale market the 
selling losses already suggested enter in, and at the retail mar- 
ket all the many inefficiencies and surplus services which taken 
together with wholesaling costs eat up approximately forty-six 
per cent of the selling price — all these pile up the bulging burden 
which the consumer must bear and the producer share. 

The mere matter of getting foods from the city railroad 
terminal to the consumer takes up nearly half the money paid 
for foods. Distribution in New York City on all foods amount- 
ed to forty-six per cent of the gross retail price, according to 
tlie Osborn legislative investigation made in 1912. Half the con- 
sumer's dollar never even gets out of town ! 

But suppose we take a look at the other end of the market- 
ing route. What do you suppose it costs to get a carload of 
potatoes from the wholesaler's warehouse in the producing 
region to the terminal market in the consuming center? 

Here is a report submitted by a large Wisconsin wholesale 
shipper who liuys, stores and ships large quantities of potatoes 
each season. His figures will not, of course, apply to all sec- 
tions or to all seasons. Moreover, some of the allowances may 
1)e higlier than there is any real need for, but in the main they 
will indicate fairly accurately wliere some of the liigh market- 
ing costs come in. 



THE COST OF MARKETING A CARLOAD OF POTATOES 

1919-20 
(AVERAGE CAPACITY, 700 BUSHELS) 

Per cwt. 
Cents 

Labor of grading, sacking, loading 11.9 

Cost of 280 sacks, tags, twine 15.33 

Cost of lining, paper, shavings, and so on 4.76 

Man to fire car to destination 4.76 



00 THE LINlVERSrJN OF OKLAHOMA 

KiR'l used in transit . - 

Stove to heat car, average 3 trips 71 

Leased car rental and tariff 2.3X 

Rejections and adjustments 4.70 

Shrinkage on stock in warehouse .3.57 

Interest on investment in stored stock ^_ .. 1.19 

Insurance, 1)iiilding and equipment - 18 

Insurance on stock in warehouse - 24 

Interest on investment in warehouses and equipment 2. J. 

Liabilitj- insurance 1 J 

Upkci.]! on buildings; fuel, light, power 

Lqiki^ii -n operating equipment . ■• 

Sell: phone, telegraph, and so on^.-. 3.57 

Exciiangi.- and interest on drafts ' V 

War tax 1 - _ 

Tiilai - fil 

Freight extra 

Rather, a formidable handicap on ihc consumer's Jolki. . 
fore the- crop gets fairly started to market, and with the t; 
mendous bump awaiting it at the other end of the line it is littii. 
wonder that there is nothing mucli left when the dollar finally 
gets back to the farmer. 

But there'are a few other little charges yet, so in its full foi - 
llie record of the joy ride of a one-dollar bushel of potatoes on 
its waj' to IxTonic a tlirce-dollar l)iislic1 would l-x^k somewhat 
as folbiws : 



•i'lll'. J( )\ RIU!. K ) MAKKJ'.l 

L'er liu. 

Price received by producer $1.00-. 

Local buyer's profit .05 

.Shipping expense to near-by wholesale shipper i' 

Expenses of wholi-ale sliijiper fas per Wisconsin 
Statement) 

Total cost of sliiiiper -._ $1,477 

.Shipper's profit — variable, average lU 10 

Freight from Central Wi.sconsin to Cleveland 198 

I'riiker's commission, at Cleveland 0.^ 

'riital cost to wholesaler at terminal marktl $1,825 



GOVERNMENT PRICE CONTROL .1 

Whuk'salcr's (.xpcnscs and profit — variable, avcra.uc fifteen 
percent on sales ^'' 

Total cost to retailer $2,141 

Retailer's expenses and profit variable. avcra.i?c thirtj^-fiv 

per cent ^ oi cost - 74' 

ToUi! consumer S2,S" 

In times ot rising prices, siieii us me jiresenr, me resr of tlie 
three dollars is readily acquired by the simple process of marking 
np the prices of stocks- on hand; in other words, keeping up willi 
the current market prices regardless of the percentage of profits. 
This last, however, is a speculative profit and must not be cluirgd 
in with the marketing costs. Later in the season, or .perhaps on 
another commodity, losses instead of* profits may accrue thru 
downward market fluctuations. For instance, apple dealers and 
speculators of the Northwest lost heavily this past season because 
of the failure of the market to advance as they had anticipated. 
The figures on the above outline of potato-marketing costs 
are typical Init must not be taken as absolute in any particulai 
case. No two shipments would be handld at exactly the same 
cost at any particular step in the marketing process, and on a 
given shipment handld with unusual efficiency thruout the 
total costs might be materially less. The data here given are 
developt from Senate investigations on the cost of living in the 
District of Columbia, from investigations thruout the country 
conducted by the Federal Trade Commission and the Bureau oi 
Markets of the Department of Agrictilture, also from price sur- 
veys of the Department of l-abor, and from statements oblaiml 
from rei)reseiitarivc dealers and sliipi)ers. 

The More Perishable Products 
When we consider the more seasonable and higlily i)erisli- 
able vegetal jIc and fruit products, such as cabbage, peas, beans, 
celery, peaches, strawberries and watermelons, we find that 
marketing costs and losses rnn very much higher than with pota- 
toes. According to the New York investigating committee above 
quoted, the average increase in price paid by the consumer for 
the four vegetal)les named, over the cost deliverd at the New 
York railroad terminals, averaged 112 per cent and is no doubt 
higher now. And this figure does not give any consideration .to 
losses due to delayd arrival, either, since these losses are usually 
thrown back on tlie shipper. 



62 THE UNIVERSITY OF OKLAHOMA 

A Chicago firm gives an example of a car of perishable pro- 
duce which arrived in Chicago fourteen days after leaving Knox, 
Indiana, only seventy-two miles away. A similar example is 
given in Detroit, where a shipment of fifteen barrels of apples 
came in after eleven days on the road, from a point fifty miles 
away, and were completely spoild. 

But what about the more staple and less perishable products 
— say, wheat and cattle? How does the consumer's dollar fare 
with these products? Are tUere unnecessary costs and losses here 
too? 

If we consider the farmer's interest in these products entire- 
ly at an end when they have passt into the hands of the whole- 
sale distributor as flour or as meat, it may be stated that the mar- 
keting has been done with a rather high degree of efificiency. 
These commodities have well-developt channels of trade, organ- 
ized on an efficient system, and while there are marketing costs 
that could and should be avoided the total charges are not ex- 
treme. 

In 1911 when wheat was selling at country elevators at 
round ninety cents a liushel, at Kansas City the spread between 
what the farmer got for a bushel of wheat and the retail sell- 
ing price to the consumer of the products of that bushel of 
wheat, including flour and feed, was aliout fifty cents. This in- 
cluded the miller's manufacturing costs as well as all profits. 

The average cost of marketing cattle, according to investi- 
gations made by the Bureau of Markets in 1915, runs somewhat 
as follows, depending on the distance from market, the qualitj' 
of the cattle, and various other factors: 

Per Cent of Re- 
tail Aleat Price 

Stockman's marketing expenses 2 to 5 

(]ross m.argin to packers 2 to 9 

There are, to be sure, considerable margins of cost which 
could be eliminated even in grain and cattle marketing, l)ut up 
to this point the charges have not bulkt large. But when we 
follow these products on until they reach the consumer's table 
we find such tremendous advances that whatever small savings 
a I)etter system of marketing the cattle or the wheat might eflfect 
would be so completely swallowd up as to make ])ractically no 
difTerence in the price the consumer pays. 

For instance, when wheat sold at ninety cents in Kansas 
Citv in 1911, retailers sold l)read at five cents a loaf and this 



GOVERNMENT PRICE CONTROL 63 

bread conlaind wheat for which the farmer had received approx- 
imately .85 of one cent ! Obviously a saving of ten cents or so 
a bushel on marketing costs of wheat would have made no per- 
ceptible decrease on the cost of the loaf of bread to the retailer, 
and certainly no difference at all to the consumer. 

Here is what the expert witness — the Bureau of Markets — 
found out about costs in milk distribution in the Detroit terri- 
tory in 1915. And while prices have advanct heavily since that 
time, the percentages of the various factors of cost seem to have 
remained about the same, therefore will serve our purpose nicely. 

Per Quart 

Price paid farmer producer in ten-gallon cans, average 02825 

Cost of collecting and handling at country stations 0015 

Transporting to Detroit 00425 



Total cost of milk f. o. b. Detroit 034 

Cost of handling at city plants, including supplies, depre- 
ciation, and interest on investment, averagfj Oil 

Cost of distribution, average 012 



Total costs to distributor 057 

*Profits of handler and distributor 023 

Price paid by consumer during June, July and August, 1915 .08 
^Derived by substraction. 

To-day, of course, these prices and costs would have to be 
multiplied by 2 or 2.25 right down the line, Ijut the relationships 
of the various items have riot changed materially. During March 
of the present year when dealers' prices in Chicago, f. o. b. city 
terminals, were $3.95 a hundredweight — that is 8 1-2 cents a quart 
— the retail price to consumers was 15 cents a quart. In New 
York the equivalent figures were 9.2 cents and 18 cents, and in 
Birmingham 10.4 cents and 20 cents. 

Quite a margin, certainly, and suggestive of many elements 
of waste, but still the evidence of material profiteering is lacking. 



The New Road 

From what has been said it is apparent that the producer is 
justified in demanding a most careful scrutiny of the costs in- 
volved in getting his goods to market. He cannot be blamed, 
in fact, for wanting to raise a row now and then because of 
these seemingly exorbitant marketing costs. It is only natural 



(.4 THE UNIVKRSITV OF OKLAHOMA 

that lu' sliould feci Unit lie could do a Ijetter job oi' it liimsell" 
And vcr\- likely he could, with the proper system. 

Another tiling that gets under the average prixhicer's liide 
is the thouglu tluit these higli ])rices, demanded ni ci )nsnniiTs. 
have the effect of cutting down consumption. 

There is a whole string of- small and sonu- largr iloii. liiiu^ 
dial could l)e effected all along the road from the" producer to the 
consumer, l)ut at best this would ])e ' when repaired merely a 
patcht up. narrow-gauge trail. What we need is a new road, liuilt 
with a solid foundation and adapted to a different system of 
travel. An automobile road rather than an ox-cart road, if you 
please. Many of the leading thinkers feel that the foundation 
d" this new road y:{\\ l)e cooi)erative-sclling associations on the 
arm and cooperative-l)uying associations in tlie city. 

lUit it will probably be some time before we are alile to 
ii-^i- this promising new road, and in the meantime it would 
>eem wise to put in a few bridges and try to take out the worst 
■>|iots in our jiresent road. 



EVILS OF BOTH RISING AND FALLING PRICES 

Prof. Irving Fisher 
1873—1896; 1896—1914 

Prices were falling during the first of these two periods. 
I'cople who had things to sell-^the farmer and the active busi- 
ness man — complaind that their profits were being cut down or 
entirely wiped out; for the prices' of their products kept falling 
while many of the charges they had to meet — interest, rent, 
and so forth — remained fixl. On the other hand people who 
had money to lend — the 'bloated bondholder' and the 'dead 
hand' — estates, foundations, hospitals, endowd churches and 
universities — were coming 'to own the earth." Their monej' in- 
comes were fixt. but each dollar would buy more and more 
every year. Vov the same reason salaried clerks were waxing 
tat. 

But from 1896 to the present, with prices risiifg- instead of 
tailing, the luck changed. The creditor, in his various guises of 
bondholder, savings-bank depositor, lessor, salaried man and 
wage earner, became the victim: while the stockholder, the far- 
mer, the business enterpriser and the l)ull speculator were the 
winners in the lottery. Tn a word good luck befell the man who 
took what was left — the so-called profiteer — after paying a 



GOVERNMENT PRICE CONTROL 65 

nearly fixl nuinl)er of dollars — each with a diminisht purchasing 
power — for his operating expenses, his interest, rent, wages, 
salary, and so forth. 

Hence it is that a new class of rich now inhabits the palaces 
on Fifth Avenue. The 'bloated bondholders' could not keep up 
the old magnificence under the growing strain of high prices. 
They have given place to the 'profiteers.' In these two phrases 
the great untutored public shows a curious intuitive sense for 
the truth which it cannot comprehend. It knows at least 'who 
got the money.' It fails to understand the cause of price move- 
ments but it sees who made money out of them at the expense 
of others and seeks a remedy against these winners. 

Shakespere stated an economic truth when he said, 'there 
is a tide in the afifairs of men which taken at the flood, leads on 
to fortune.' This tide between 1873 and 1896 carrid the bond- 
holders on to fortune and made them 'bloated,' while between 
l896 and to-day it carrid the stockholders on to fortune and 
made them 'profiteers.' 

Can You Blame Them? 

It will do no good, of course, to rail at the lucky winners 
in the lottery. The public was greatly mistaken in attributing 
low prices to the 'strangle hold' of wicked bondholders and it is 
equally mistaken to-day in attributing high prices to the per- 
sonal turpitude of profiteers. The fault is not theirs. While they 
have, in a sense, won their neighbors' stakes or pickt their neigh- 
bors' pockets, they did so without intent to defraud. They have 
simply played the game. We should stop the game, not blame 
those who played it. 

How can we blame a business man — especially one who as 
ofificer of a corporation acts in the interest of others whose 
capital he is managing — for getting the best prices he can? 
W^e cannot expect him to sell below the market. In fact if 
market conditions cause profits to fall in his lap, he would be 
recreant in duty to throw them away. What we should aim 
to do is to make such abnormal market conditions impossible. 

THE "EXCHANGE" 

In every market there are two classes of traders, the Bulls 
and the Bears; the former trying to raise prices and the latter 
trying to lower them. Each of these have monej' and great 
interests at stake dependent upon their success. The bulls will 



66 THE UNIVERSITY OE OKLAHOMA 

do all they can to raise prices and the bears will do all they can 
to lower them. They combine to secure the latest, the com- 
pletest, the most trustworthy information. They do all that is 
humanly possible to ascertain all the facts affecting supply and 
demand and everything that may affect prices. They make a 
business of this; they become experts at it. The stakes are so 
great that when their judgment is corr-ect they sometimes make 
fortunes in a few days, and often lose them again. 

The knowledge and discernment of those who deal "on 
'change" are so great that to the uninitiated it seems like pure 
gambling. Their actions often seem like those of madmen. The 
ignorant and inexperienced often try their hands in the gaine 
and "gtt skind". the "lambs get fleeced", etc. Wealthy men 
often go into it for the excitement and back both bulls and 
bears so their gains by one will offset the losses l)y the other. 
While these are mere incidents thej'^ often monopolize the public 
attention and observation. But behind them are working the 
utmost of human intelligence and experience trying to determine 
prices. While the gambling features are ol)jectiona1)le and some- 
times deplorable no way has been found to entirely prevent 
them. The rules ofExchanges ar e usually as strict and stern 
as it is possible to make them, but interests and prizes are so 
great that no human rules can entirely control. 

Of course the element of chance is there in the nature of 
things; it cannot possibly be eliminated, and to some it will 
always seem the chief feature. Great buyers often contract a 
year or more ahead. In the case of a house, a machine, or a 
ship this would be absolutely necessary; such things require 
long preparation, and a long time for execution. Suppose a 
miller is to bid in Dec. on a contract to furnish a train load of 
flour to be delivered the following May. The price he bids 
will depend upon the prices of wheat several months ahead. 
If wheat should go higher than he expects he would lose; if 
lower he would gain. He cannot afford to risk his own un- 
aided judgment. Thru a representative he goes "on 'change" 
and buys a "future" on the amount of wheat he will need to fill 
the contract. If wheat goes up in May he will gain, if down he 
will lose. He then bases his contract price on this "future" 
price. If, tlien, the price of wheat should go higher than the 
expected price he would lose on the flour but gain on the 
"future"; if wheat should go lower he would gain on the flour 
and lose on the "future." In either case he is protected, and can 



GOVERNMENT PRICE CONTROL 67 

do business safely; the wheat exchange enabled him to avoid 
gambling in making the contract. 

Suppose it is December in Oklahoma. Wheat has been sown 
hut there has been no rain since. These facts are well known 
to the men "on change" in Chicago. For weeks they have been 
aware that unless there is rain soon in Oklahoma the wheat 
crop there will be short and the price of wheat next year would 
be higher in proportion. Some who feel certain that their judg- 
ment is correct will back it up by offering to buy wheat at $2.00 
a bushel, the price they think it will be. Others who think the 
price will be lower will agree to furnish wheat at that price on 
July 1, At that date to fulfil their contracts they would have to 
buy the wheat at whatever might be the market price. The rest 
of the people who are interested in tlie future price of wheat 
Icnow that these men are experienced and skillful observers, that 
they weii'h every circumstance and factor that may affect the 
price, and so they can make their investments and contracts ac- 
cordingly. Without some such an agency as a grain exchange 
modern business would be impossible. Government control could 
do nothing but harm In- interference. 



A FEW QUOTATIONS 

Chas. H. Van Hise: "1 believe it probable that if, following 
the war, wise governmental regulation is continued not merely 
for the public utilities but for every essential commodity, the 
savings to the people will be sufficient to meet the money cost 
of the war". Lectures on Conservation, p 233. 

The fixing of the price of soft coal in 1917-8 saved consum- 
ers about $700,000,000. Review of Reviews; Oct. 17. 

In 1917 shoe manufactures sold the Government shoes at 
$4.80 and the same shoes to the public at 9 to 12 dollars. Why? 
Middlemen's profit. Wis. State Journal, 2-9,-'17. 

President Wilson: "Recent experience has convinct me 
that Congress must go farther in authorizing the Government 
to set the limits to prices. The law of supply and demand has 
been replaced by the law of unrestraind selfishness." 

Prices of cotton and woolen goods went up enormously 
early in the war "because of the Government demand" dealers 
said. But the soldiers would have been clothed equaly expen- 
sively at home. Government investigators reported that the 
greater part of these increases were due simply to the fact 
that "the war" served as a psychological excuse for profiteering. 
Wis. State Journal, Dec. 9, '17. 

Harry B. Hunt: "There was a great shortage of sugar in 



68 THE UNIVERSITY OF OKLAHOMA 

the United States during the war but the price only advanct 
one or two cents a pound. There has been no such opportunity 
since the Civil War for large holders of sugar to sky-rocket 
prices and clean up millions overnight. But Herbert Hoover, 
food administrator, had blockt the chance for anyone to make a 
"killing" in sugar. He knew the prices at which sugar moved 
to the refiner, and to the wholesaler, and to the retailer, and 
he ruled that any refiner, wholesaler, or retailer who exacted 
exhorbitant profits should lose his license to do business. As a 
result, sugar prices remaind steady and millions of dollars that 
but for his regulation would have dropt into the hands of sugar 
Shj-locks have remaind in the purses of American housewives. 

"During the Civil War, without government regulation, 
sugar went to 35c a pound and there was no world shortage." — 
(Ladies Home Journal.) 

"We are demonstrating that the government of a republic, 
awkward and uncertain as it necessarily is, may, nevertheless, 
learn how to control industry, even agricultural operations, and 
other business enterprises for a general end, and with great gain 
in national efficiency. That this control need not be so vigorous 
in days of peace as in days of war it is not necessary to argue, 
but having workt out its possibilities by the crude trial and error 
method we shall not again permit either big or little business to 
run amuck, exploit the public, and often destroy itself on the plea 
that government is by its nature unfit and incompetent to inter- 
fere in business matters. The functions of government will 
henceforth be enormous, responsible, and dignified, and we may 
reasonably expect that the career of the national legislator and 
of the administrative officer will offer attractions to men of high 
character and great ability more nearly proportionate to the at- 
tractions offered by big business and the opportunities of the 
corporation lawyer." The Independent, Aug. 11, '17. 

Soft coal is being sold to the state of Indiana for use in 
the state institutions at $2.95 for slack and $3.50 for lump coal. 
These figures are most interesting at this time. They show 
what coal may be sold for and a reasonable profit secured for 
the producer. They put the stamp of unreasonableness on many 
prices that have been quoted in other coal states. Private con- 
sumers, will not be able to secure such low figures because they 
do not take so much as the state requires and the contracts 
would not be continuous, as is that of the state. But what 
shall be said of prices up to $15 per ton for soft coal that have 
!)een quoted? If coal may be sold at a profit to the state of 
Indiana for $3.50, what is it but shameless profiteering when con- 
sumers are facing prices four times that figure? There is no 
possible justification for some of the coal prices that are being 
quoted in the market. Unreasonable profits are being sought 
somewhere along the line from the mine to the consumer. — Ohio 
State Journal. 



GOVERXMEXT PRICE COXTROL 69 

BRIEFS 

During the war the minimum price of wheat was fixt by 
Congress at $2. On account of freight adjustments 26c was ad' 
ded afterwards. It had been $3.50 but the highest future price 
on the Chicago market at that time was $2.15. The carrying 
of soldiers and munitions greatly interfered with the shipment 
of grain, so wheat was likely to go so low that it would not pay 
farmers to raise as much as the world needed. The object of 
the law was to guarantee a fair price to the farmer, and it did 
not prevent the price from going higher — nothing was said 
about that in the law. Many farmers unjustly blamed the gov- 
ernment for lowering the price, but it did no such thing. 

The price of hogs sometimes drops from 30 to 60 cents in 
24 hours. There is no valid reason for this ; the "laws of supply 
and demand" are not that fickle. 

It is easy to charge that prices are manipulated.. But the 
prices in America have been practically the same all over the 
world, making allowances for locations, etc. How can the 
whole Avorld get together and "manipulate" prices? 

During the price-fixing period farmers in Minn, fed wheat 
to stock and sold their oats and barley for human food, because 
the prices were so much higher. 

This is the exact issue: Should prices be made by the un- 
restraind greed of a few manipulators who wrong both pro- 
ducer and consumer, or by a Commission representing all the 
people? Of course the selfish price gamblers and their helpers 
will protest loudly against any interference; we must expect it. 

In war times nations must control prices or perish ; the 
policy is not even debatable then. Most European nations con- 
tinued -the policy long after the war because conditions re- 
quired it. Why should a policy universally desirable and nec- 
essary in war be utterly irrational in time of peace? 

It must be admitted that price control will be very difficult, 
for it will have arrayed against it all the ingenuity and the 
monetary resources of human selfishness and greed which will 
be employd without restraint or limit in defeating the public 
good. Price control would face a very complicated and in- 
tricate condition, but that is no argument against it if it is 
right. 

The farmers got an average of $1.44 per bushel for the 1916 
crop. Five months later wheat was $3 a bushel. But not a cent 
of the profit went to the farmer, who had already sold his crop. 



7a THE UNIVERSITY OF OKLAHOMA 

Opponents of price control assert that if the government 
had not interfered with prices they would have rcmaind lower than 
they were under government control. Such a claim seems ut- 
terly groundless in view of the plain facts of histor}^ During 
the Civil War the governnunt did not interfere in the least 
with prices and the cost of many necessities went up to ten 
fold. After the farmers had sold their wheat in 1916 wheat went 
to over $3.00 a bushel with no interference whatever from the 
government. Without government restraint sugar would have 
gone to 30c a pound or more. 

It is universally admitted both in this country and in Eur- 
ope that but for food control the Allies would not have won 
the war. The war against their own unpatriotic profiteers was 
as difficult and serious as the war against Germany. And yet 
there are men who fought the Food Administration Act for three 
months in Congress and did everything they could to prevent 
its passage. And in the ranks of these opposers of that most 
important law were many of the very ones who are now op- 
posing price control. Their action then shows that their judg- 
ment is worthless ; it was worthless then and it is worthless now. 

E. H. Gary, head of the U. S. Steel Corporation requested 
the continuation of Government control of prices of steel, and 
offered to submit to a reduction in prices in order to get it. 
They thought that stableization would so increase the volume 
of business that it would be better than turning things loose 
and trusting to the laws of supply and demand. This is a large 
exhibition of the fact that price control is not antagonistic to 
legitimate business; those v.ho wish to plunder or profiteer object 
of course, but ordinary, honest business would be far better ofiF 
with stable markets. 

Sen. Gronna charged that Hoover had reduced the price of 
wheat to the farmer one-third without affecting the price to the 
consumer. There was a joker in the act of Congress: it did not 
apply to dealers doing a Imsiness of less than $100,000 a year. 

We are fully committed to the national policy of controling 
the prices that railroads may charge; no one would seriously 
propose that we go back to the times before this control was 
establisht; the policy is universally accepted as just and wise. 
But why discriminate so against the railroads? Why regulate 
their prices and permit all other lines of business to go un- 
restraind? If price regulation is so good in transportation mat- 
ters it would be good in other matters. 



GOVERNMENT PRICE CONTROL 71 

It has always been claimd that the laws of supplj' and de- 
mand would control the quality as well the price of articles. 
Why do we have our Poor Food acts? Simply because as a 
matter of fact the laws of supplj^ and demand faild to preserve 
the quality. 

Why do we have the anti-trust laws, the Sherman Act, 
the Clayton Act, etc.? To prevent the laws of supply and de- 
mand being annuld b}^ combinations and monopolies. The fact 
that such laws were needed shows clearly that the ultimate con- 
trol of prices could not be left to the tender mercies of mon- 
opolistic greed; that the laws of supply and demand were 
insufficient unless assisted bj' law. But are these laws entirely 
successful? 

We have long been trying by stringent laws, both state and 
national, to compel competition in the belief that if we can only 
keep competition the laws of supply and demand will regulate 
prices satisfactorily, or at least better then any other means. 
We dissolvd the Standard Oil Co. but prices of oil kept rising. 
The conviction is rapidly growing that antitrust legislation is 
futil; we must go farther. Anti-trust laws are merely indirect 
efforts to regulate prices; if they fail there is nothing else to do 
but try more direct efforts. 

No man has any natural right to do business unless he is 
fair and honest. The method adopted during the war of licen- 
sing dealers and manufacturers to do business is the best plan 
ever tried. If it is provd that they forfeited the right to do busi- 
ness with their fellow men the licenses in canceld. In that way 
the public is protected and no one is wrongd in the least. 

The case of milk is a fair example. If the price goes up the 
poor cannot get it and their children die, or are so stunted in 
growth that they can never reach full maturity. High price of 
milk, then, means wholesale murder of innocent babes and small 
children. This is a crime which if perpetrated by anything else 
but prices would arouse the world as nothing ever has in all 
history. On the other hand, if producing milk is made unprof- 
itable, its producers will go into other business, and there will 
be less milk than ever. The City has found it necessary to 
furnish water; should it also furnish milk? 

There is not, nor cannot be such a thing as entirely "un- 
restraind greed," for it is always restraind by economic laws. If 
the price of a perishable article is made too low the demand for 
it will be diminisht and the supply on hand will be lost. A 



11 THE UNIVERSITY OF OKLAHOMA 

business may easily be wreckt Iiy making prices too high. High 
prices always drive away customers on which the prosperity of 
the business depends. Dealers cannot live by piling up goods on 
their shelves ; they must sell them. 

It is notorious that supply and demand are often partly ficti- 
tious. It is not only actual supply and demand that affects prices 
but supposed or anticipated conditions are also effective tem- 
porarily. Markets are flooded with telegrams, reports, rumors 
so that neither bulls or bears certainly know actual conditions. 
Much of the irrational fluctuations of markets are due to such 
methods. In many cases government reports only are trusted, 
and yet' even thei- may be manipulated, at least to some extent. 
The negative argue that if supply and demand were let alone 
they would make prices just right. But when were they ever let 
alone? The argument is merely academic. The chief need for 
government price control is to see that supply and demand do 
control prices instead of greed and cunning. 

The negative argue that all interferences with the opera- 
tion of supply and demand are only temporary. This might be 
more or less true of any individual interference. But when one 
interference fails it does not require superhuman cunning to re- 
place it with a dozen others. The main struggle of the market 
is to convince and deceive ; and the fluctuations of the market 
sliow that the success of neither is uniform. Belief in a ficti- 
tious supply and demand often bridge over actual conditions. 
]t is notorious how the "lambs" in the market are fleeced, but 
there is no exact dividing line between the lambs and others. 

The object of the price-fixing act was to assure " an ade- 
quate supply and equitable distribution of necessaries, and to 
prevent scarcity, monopolization, hoarding, and injurious spe- 
culation." Who could reasonably or justly object to that? 

The negative say that price-fixing is a failure unless it does 
everything. That is unreasonable. Every country engaged in 
the w^ar adopted that policy because the laws of supply and de- 
mand had faild, and not only that, they had become a positive 
menace. Price-fixing did more for public good than any other 
policy ever tried; compared with other policies it was a great 
success. 

The opposition to price-fixing constantly assert that Gov- 
ernment regulation entirely suspends the laws of suppl}'^ and de- 
mand. This is palpably false. The chief object of government 
regulation is to insure that those laws function naturally and 



GOVERNA'IENT PRICE CONTROL 1Z 

justly. It is assumed that all government regulation is to be 
arbitrary and unreasonable; that government ofiEicials w^ould 
all be incompetent or dishonest. On the contrary the facts of 
supply and demand would furnish officials their chief reasons for 
their acts, and would never be disregarded except where the 
public welfare required it. 

The laws of supply and demand are not effective against 
combination, monopoly, greed, or cunning. We need a govern- 
ment commission to see that those laws have opportunity to 
function normally and effectively, to prevent their being inter- 
fered with, and to see to it that price changes are proportional 
to the facts and conditions which cause them. 

The laws of supply and demand are admittedly relentless 
and merciless. Should human law stand mute and helpless in 
the presence of natural law? Should we stand idly by and let 
a city burn down because the conflagration was proceeding 
strictly according to chemical laws? That is merely the dis- 
credited "Lassez Faire" (let alone) doctrine in another form. 
It is merely an excuse, a cover for selfish greed. 

It is universally admitted that but for the price-fixing law 
wheat would have risen to $3.50 and possibly to $5 a bushel. 
More wheat might have been raised but only the rich could have 
bought it. It would have bankrupted our Allies to feed their 
armies ; the suft'ering of the poor would have been beyond endur- 
ance ; in short, we should have lost the war, for Germany had 
price control all the time. 

In 1916 bituminous coal in Pennsylvania was selling at $1.40 
a ton. Before the Fuel Administration began, the price had risen 
to $4.50 while the cost of production had increast only 30c a ton. 
Vet there were those who howld against government regulation. 

The wrong doer is always vociferous in his demands to be 
let alone. He claims that the laws of supply and demand should 
l)e let alone. He talks as if Supply and Demand was a sort of 
deity, omnescient and benevolent, and who functiond as an intelli- 
gent personage in human affairs. The affection of profiteers for 
the laws of supply and demand is very touching. 

The laws of supply an demand often work cruelly and dis- 
astrously and then tlieir action must he restraind and regulated, 
and only the Government can do it. When the supply of some 
necessity is short the price rises so that only the rich can buy 
while the poor suffer want. And if a crisis should come the 
masses would have been underfed to such an extent that the 



74 THE UNIVERSITY OF OKLAHOMA 

countn- would lack capable defenders. The laws of supply and 
demand are neither intelligent or benevolent ; they need regulation 
and restraint as much as any other natural laws. 

Mr. Hoover prefers to call ])rice-regulation "stableizing 
prices". The suggestion is a good one. High pr ices are not the 
only evil charged against unregulated prices. Every variation 
in prices varies every wage and salary, every inventory, every 
det or obligation in the nation. Yet nothing is so fickle or ca- 
pricious as prices. 

It is notorious that the prices of farm products are low till 
most of the farmers, especially the poorer ones, have sold their 
crops. The prices then go up and the middle men make the pro- 
fit. The diflference in prices is usually out of all proportion to 
any changes in su])i)!y or demand t)r any services rendered l)y 
middlemen. 

One very remarkable thing about retail prices is tliat when 
wholesale prices go up retail prices respond instantly and abund- 
antly. But when wholesale prices go down it takes the retail 
dealers a long, long time to find it out. A government agency 
is badly heeded to equalize the speed at which price changing 
information travels. 

Some talk as tho supply and demand were the only things 
tliat intiuence prices. There are many other things ; as, fear, ex- 
pectation, sentiment, taste, fashion, habit, association, riches, 
seasons, terms, credit, facilities, poverty, foolishness, deception, 
salesmanship, needs, uncertainty, health, accidents, sickness, etc. 
Of course many of these affect demand more or less and make it 
to some extent fictitious. 

It is admitted that price-fixing is necessary in war on account 
of the great exigencies. But to millions of the poor the exigency 
is as great all the time as in war time. Protection from exces- 
sive prices is a necessity to them at all times. 

It is argued that government price-fixing is impracticable 
because some can produce at lower cost than others. If the 
price fixt leaves a reasonable margin of profit for the high 
cost producers it legalizes an exhorbitant price for the low cost 
producers. The objection applies with equal force where prices 
are not fixt by the government and so has no special weight 
in this discussion. During the war the object was not only to 
keep prices from being too high, but to stimulate the utmost 
production. To do this, high cost production had to be taken 
care of far more than in peace times. At present high cost 



GOVERNMENT PRICE CONTROL 75 

producers have to meet prices made by their competitors in 
secret; while under government regulation prices would be 
made in open court where all parties could be heard. 

One object of price regulation must always be to increase 
production. If the price be fixt too low the high cost producers 
are driven out of business and production would be diminisht 
so that the price would rise, but too late to save high cost 
producers. At present the high cost producer has to join 
a trust or combination for protection. 

When farmers in North Dakota were selling hides at 7c 
a pound they were compeld to pay $100 for harness using 80 
lbs of hides, costing $5.60. A government designed to serve 
farmers should have the power to look into such conditions as 
that and correct them. 

If we hold down the prices of essentials by law, the prices 
of non-essentials will soar, and producers will be tempted to 
produce non-essentials. Why should a farmer sow wheat that 
brings him $31.64 per acre, when an acre of corn will yield him 
over $100? If the government fixes the prices on wheat the 
price of other grains will inevitably go up and the production 
of wheat will decrease. There can be no law successfully en- 
forced against a man for paying $2 a bushel for wheat if he 
wishes to even tho the price is fixt at $1 a bushel. And if 
men are offered $2 a bushel for wheat a law to make them sell 
it for less than that cannot be enforced. It is idle to advocate 
such laws. Supply and demand will rule. 

The crux of the whole matter is this: do supply and de- 
mand always make prices? That they normally influence prices 
is bej'ond debate, but that every price is made by supply an 
demand is to the last degree improbable. It is well known 
that they cannot function in price-making unless there is free 
competition. Where there is combination or monopoly they 
have but little influence. Nothing is more certain than that 
coinbinatit)ns, agreements, understandings, etc., are very common 
if not universal in modern business. They are secret of course 
and so details are not easily secured, but none but a saphcad 
would deny their existence. We cannot compel men in businei^s 
to compete or cut each other's throats however profitable it might 
lie to the public to have them do so. Competition is undoubtedly 
greatly modified or limited and so does not have its normal 
effect on supply and demand. To insist, then, that we should de- 
liend solely on the laws of supply and demand for the protection 



Id THE UNIVERSITY OF OKLAHOMA 

of the public is plainly irrational. 

There is no law, and no law is possible, to compel anyone 
to produce a necessary commodity without profit. The more 
necessary an article is, then, the more necessary it is that it 
should pay a profit that will produce it in sufficient quantities. 
Price-fixing, then, must include two contradictory and self- 
destructive purposes, one to raise the price, and the other to 
lower the price. The most efficient government that ever ex- 
isted could not do that, successfully. 

I-iaising or lowering prices also increases or decreases pro- 
duction and consumption raises or lowers every salary or wage, 
appreciates or depreciates every investment or property of every 
kind, affects seriously the whole life of all the people. It is 
preposterous to claim that this should be done without the 
knowledge and consent of a commission representing all the 
people. We cannot say that the price of coal is merely the pri- 
vate affair for the mine owner or operator for it vitally affects 
the lives of all the people, and of the poor especiallj'. 

The report of the Federal Trade Commission on cand foods 
shows completely that the leading canners of -almon announce 
their opening prices late in August every year. Nearly all an- 
nounce the same i)rices, and many who did not announce a price 
used those made h\ the majority. These prices are made l)y the 
producers only ; the consumers are not consulted nor are their 
interests considerd. The price-making is absolutely one-sided; 
the public is chargd all it will pay. The price is named that will 
l)ring the largest proht. 

A. Mitchell Palmer. Attorney General of the United States, 
was given tlie jol) of reducing the high cost of living No man 
ever tried harder to succeed ; for success would have easily made 
him president of the United States, and deservedly. While he has 
indicted something like a thousand persons for profiteering, and 
in spite of courts delays and every obstacle that human ingenuity 
could place in his way, he has secured several hundred convic- 
tions, still he has not substantially reduced the cost of living. 
What does it mean? History informs us that the job he under- 
took was never performd by any man. It is true that a sensa- 
tor declared that "the Government could reduce the high cost of 
living whenever it wisht to", but that was the cheap American 
partizanship of which we are all so ashamed. The cost of liv- 
ing is higher in nearly every country in the world than in the 
U. S. and no one lias succeeded in brinsj;ing it down, anywhere. 



GOVERNxMENT PRICE CONTROL 11 

Roman emperors tried it, endowd with greater power than any 
modern government, but they faild. We need not say it is im- 
possible but we must recognize that it is probably the most 
difficult thing ever attempted by a government, and also that 
there are reasons for the difficulties. 

Prices are not a material fact but a mental fact, the indication 
of a state of mind exprest in material terms ; and so when ex- 
amind from a material standpoint they often seem irrational and 
anomalous. It is not actual but expected supply and demand that 
control prices; it is not actual supply and demand but beliefs 
concerning them that are chiefly effective. And so market places 
where prices are made are crowded with reports, guesses, fore- 
casts, rumors, false alarms ; efforts to create panics vie with efforts 
to create confidence. The means used to establish prices are ab- 
surdly and monstrously disproportional to the tremendous inter- 
ests involved. Some more rational way must be found. 

It is admitted that prices are easy to raise but hard to lower ; 
is that due to the laws of supply and demand? 

There have been cases where 30c a ton has been added to 
the pay of miners, and about $2.10 a ton added to the price 
consumers had to pay. 

It is universally admitted that price-fixing is successful in 
.war times because the people are patriotic. But do people lose 
their patriotism entirely when war ceases? 

A tax on excess profits is the fairest tax that can be devised. 
But it is impossible without government control of prices. 
With such control the tax could not be passt on; otherwise it 
will be. 

A drummer, speaking of a man who had recently faild in 
business, said that there must be something lacking about a 
man who could not make money under business conditions of 
the last few years. 

It is claimd that the price-fixing board appointed during the 
war was a failure and voluntarily resignd. What else could have 
been expected when six members of it represented capital and 
only one represented labor? 

If prices can be regulated so easily, as the affirmative claim, 
why in the world hasn't it been done long ago? It has been 
tried often enuf. The trouble is not that government price regu- 
lation is wrong; it is impossible. 

It is utterly impossible to get a Price-fixing Board which 



78 THE UNIVERSITY OF OKLAHOMA 

would he equally satisfacton- to lioth bulls and hears. It could 
not he trusted hy one without heing distrusted hy the other for 
their interests are diametrically opposed. 

It is a settled principle in business to sell goods for what 
they bring. "Charge all the traffic will bear", as the railroads 
used to say. To many there is no such thing as a fair or honest 
price. "All you can get" is the only limit. 

Multitudinous and strenuous efforts are constantly made by 
manufacturers and dealers to prevent competition, or at least to 
restrain it as much possible, because competition always tends 
to lower prices in selling and raise them in buying. Will the 
negative claim that the prices so made are the result of the free 
action of the laws of supply and demand? 

If prices are too high consumers won't pay them, that is 
demand falls off. This happend in 1919 when the Price Fixing 
Board fixt the ]n-ices of steel rails and the Railway Administra- 
tion refused to pay them. What customers are willing to pay 
must in the end control the price at which goods will sell, and 
no possible legislation can materially change it. 

The interests involved in prices and price-making are sc 
vast and so fundamental to human existence that it is irrational 
to leave them entirely to chance, to monoplistic combination, or 
unrcstraind selfishness. Some way must be found to make prices 
more fair and just or civilization itself must perish. It is no 
longer a merely academic question but a burning question which 
must have a satisfactory answer. 

The opposition to price regulation fully recognize the terrible 
evils of high prices and of the high cost of living, and all the ter- 
rible wrongs occasiond by them. They are not debatable. The 
sole question before us is, What is the remedy? The policy of 
government price regulation has always aggravated the evil it 
was intended to remedy. It never has succeeded, so the presump- 
tion is against it. There is no .escape from these facts. 

The affirmative would throw overboard the elal:)orate machin- 
ery of markets which the world has been 400 years in building 
up and replace it with a commission either of politicians or men 
selected by them. .Vt present men fix prices only by buying and 
selling at the prices they make; thus they have a financial inter- 
est in the correctness of the prices they make. But the members 
of a commission would have no such financial interest. 

If an individual acting alone investigated the bearing supply 
and demand had on prices before he paid them, certainly, there 
1 ould be no valid objection. But if the individuals in a com- 



GOVERNMENT PRICE CONTROL 79 

munity instead of inefficiently and incompletely acting alone, com- 
bine and establish a competent commission and equip it with 
every possible facility for such investigation, there is a great out- 
cry against it by the profiteers and their tools and assistants. 

Makers of automobiles, phonographs, agricultural machinery, 
and thousands of other articles now fix the price on them and re- 
fuse to sell to those who will not maintain the prices. Supply 
and demand has nothing on earth to do with the price. Charge 
all the traffic will bear, is the only principle applied. No interests 
are considerd except those of the manufacturers and dealers. 
Yet the same people vociferously tell us that only Supply and De- 
mand must control prices. 

Prices are made in the towns and cities where all the price 
makers live. Farmers and laborers generally have little or no- 
thing to say about prices ; they must take what they can get and 
pay what they are askt. This policy has been carried on so long 
and so far that ruin is now threatening the farmers and Bolshe- 
vism the whole world. The arrangement is not fair and never 
was, as it is Government price-control is by far the most con- 
servative and just proposal yet made. 

Why don't some of those who bellow so loudly about prof- 
iteering furnish a little proof of it? The politicians are des- 
perately anxious to get such proofs. Many eminent judges 
have exprest their opinions of profiteers in burning words. All 
we want is the evidence. If the affirmative would get proof of 
one case of proiiteering that would convince a jury and bring 
it into this debate it would count more than all their assertions 
about it. We repeat it; why don't the affirmative produce evi- 
dence ? 

If a man has any right whatever in this world, lie has the 
right to sell bis property for what it is wortli. And it is worth 
what it will liring in a free, open market. No law in the world 
can make a man take a dollar for an article that he is freely 
ofiferd two dollars for. It would take omniscience and omnipo- 
tnece to enforce such a law, and we do not have them. To 
lower the price on what a man has to sell and not lower it on 
what lie has to l)uy would be a wrong so aggravated that it 
would subvert society. 

The government quickly found that they could not fix the 
price of wheat without also fixing the prices of barley, oats, 
corn. etc. In order to keep the price of wheat at a fixt figure 
it was necessary to fix the prices of other crops so that the far- 
mers would not be tempted to quit raising wheat for something 



Sa THE UNIVERSITY OF OKLAHOMA 

more profitable. The same principle holds in manufacturing; 
if the price of one article is fixt the price of every other article 
must also be fixt to which the manufacturer might turn if it 
offered a larger profit. 

Which is more likely to respect the laws of supply and 
demand, the boundless greed of men in haste to be rich or a com- 
mission representing the whole people? The only object of 
such a commission would be to secure right and justice to all; 
but the sole object of combines is higher prices than the laws 
of supply and demand give them. Even if the commission faild 
it is still the ideal, and that practically never is the aim in pri- 
vate or corporate business; the sole aim there is profits; they 
are not in business for their health. 

All natural laws work hardships sometimes, and economic 
laws are no exception. But when they work harshly there are 
often compensations. If drouth destroys half a farmer's wheat 
crop the supply is reduced and the price will go up, so that he 
often gets as much or more for his half crop than he received in 
previous years for an abundant crop. But when government 
price meddling robs the farmer of part of his profits it is power- 
less to compensate him even if it tried; and if it succeeded it 
could do so only by robbing someone else. 

The simple fact is, the bulls and bears are merely gamblers 
betting on the prices of grain. The prices they make are dictated 
entirely by their self interest, and that interest is the narrowest 
and selfishest that it is possible to conceive of. Tlicy care no- 
thing whatever for justice; either to the producer or consumer; 
they care nothing whatever for the public good or even the high- 
er interests of themselves and their families ; they care for no- 
thing in the wide world but a profit. And the negative arc try- 
ing to make us believe that this is all sufficient. 

It is admitted universally that when supply and demand are 
well balanct and acting normally we have no better means of de- 
termining prices. With luxuries the law works perfectly but 
much less perfectly with necessities of life. If the price of a 
luxury increases unduly, people will not buy it, the demand de- 
creases. But if it is a necessity, the people must have it what- 
ever the price, tho' they may get along with the smallest quantity 
possible. While they might refuse to buy a luxury which was 
priced too high, they must have the necessities, whatever the price. 

The public is very slow to learn their A B C's in matters of 
taxation. In the nature of the case it is almost impossible to 



GOVERNMENT PRICE CONTROL 81 

tax a merchant so that he and he only will pay it. Taxes are 
a part of the expenses of doing business and must be paid ex- 
actly as all other expenses are paid, — by adding them to the 
cost price, for expenses are clearly a part of the total cost. 
Then if the merchant wishes to make 20% on the total cost, his 
customers not only pay his taxes but pay him 20% profit on 
that expenditure the same as upon any other part -of his invest- 
ment. 

Let the issue be clearly seen : The affirmative does not ad- 
vocate price-control as a substitute for supply and demand. On 
the contrary it favors government price control in order to en- 
force the laws of supply and demand which arc now constantly 
being evaded. It is certain that all kinds of combines and mon- 
opolies cooperate to manipulate prices. The public must have 
protection against them, and government price-control is the 
only protection that has ever been suggested ; it is the only 
tiling that has a ghost of a show to afford the pul)lic any pro- 
tection. 

It is agreed that the fact that the public will pay prices is 
their justification. This is seldom if ever true. For the neces- 
sities of life the public must pay whatever is charged: it can not 
help itself. Then the public can not be well informed as to 
what prices are justified by supply and demand. This should be 
determind for them by a commission acting for them which is 
furnished with every possible facility for securing accurate in- 
formation. At present the public may feel that it is being robbed, 
but it has no way to prove it, and no facilities for even investi- 
gating the matter. 

Of course no one should be convicted without evidence, but 
on the other hand the lack of evidence is no proof of innocence. 
When a jury pronounces a man not guilty, it does not declare him 
innocent ; it only declares that the evidence was not sufficient to 
convict . But while no one is legally justified in charging pro- 
fiteering unless he has legal proofs of it, on the other hand to 
say that concerns which are making fabulous profits are not 
profiteering unless specific proofs are forthcoming is outraging 
common sense. Profits may be great enuf to make profiteering 
a moral certainty. 

If profiteers are ever convicted it must be liy evidence which 
they themselves furnish, or which must be furnisht by their 
records. Is it strange, tlicn, that prosecutions are difficult and 
convictions rare? The wonder is that there are any at all. In 
every court it is not the truth tliat wins the case but the evi- 



82 THE UNIVERSITY OF OKLAHOMA 

dence of it ; no cause can win without evidence. Unless a firm's 
own books and records show that it has been profiteering it is 
practically impossible to convict it. Anyone is very unsophisti- 
cated who supposes tliat books cannot be kept so as to bide things 
desired to be hidden. 

The affirmative argue that increast profits are due to in- 
crcast volume of Inisiness. That looks plausible ; but the fallacy 
is that the same volume of business now, measured in dollars, 
would be more than twice what it was five years ago. That is, 
the same volume of business in the amount of goods handled 
might seem more than doubled if we compare values in dollars 
instead of amounts or quantities. It is evidently absurd to say 
that a business which handled 1,000,000 lbs of beef in both 1914 
and 1919 is doing more than twice the Imsiness now and sn is 
entitled to twice the profits. 

All business, production and marketing, exist solely for the 
benefit of the consumer. Many business men go on the assump- 
tion that customers exist to make business and pay profits to 
producers and purveyors of merchandise. This pervision is at 
the bottom of much of our troubles. Business has no right to 
profits except as they are a recompense for actual services ren- 
derd to customers and to the public. The common rule of busi- 
is, "charge all the traffic will bear," "get all you can ;" and yet 
the public is askt to believe that nothing affects prices 1)ut the 
laws of supply and demand. 

It is evident that all the costs of doing business must ulti- 
mately be paid by the consumers, who are not consulted in any 
way as to the bills they are expected to pay. The "drummer" 
system, for example, is enormously expensive. An army of 
drummers is on the road all the time, living at the best hotels, 
travelling in sleepers, and paid the largest salaries. They are 
doutless a convenience to retailers, wholesalers, and jobbers, 
and they are supjiortcd for that reason. It is not clear that they 
are equally valuable to the primary classes, producers and con- 
sumers, who have to pay for them. 

We marvel at the savagery of the punishments which have 
l)cen inflicted for violating price law.s, and yet all fn vain. In all 
history every fixing law in normal times has proved a failure. 
The multitudinous and infinitely intricate and conflicting char- 
acter of the factors which enter into price-making make it the 
most difficult subject in the whole range of human activities. 
All the time economists have been telling us that making prices 
by law is entirely beyond th range of human powers. While 



GOVERNMENT PRICE CONTROL 83 

prices are opinions, they are based closely upon facts to which 
they must conform or speedily lie changed. 

Prices are essentially an opinion. They are the approximate 
judgment of many traders as to the facts upon which prices are 
hased. If the opinions be correct and the prices correspond the 
results will be the best possible. The basis of price is facts, 
the facts of supply and demand. A great supply lowers prices, a 
great demand raises them, the correct price is the equilibrium of 
the two forces. In market reports, the real price is not that 
which was bid or that which was askt, but the price that was 
actually accepted. In this both sides agreed ; that is, there was 
a balancing of the efifects of demand and supply. 

In France, during the great /evolution, desperate efforts 
were made to control prices : tho most drastic laws were passt 
and the most terrible penalities enforced for their transgression 
but matters only went from bad to worse. The guillotine took 
off the heads of thousands in vain ; they could not enforce their 
laws. And all the while the eternal economic laws went on in 
imperious defiance of the petty attempts of men to put them aside. 
Vou had as well talk of putting aside the laws of gravitation as 
the laws of supply and demand. They may be obscured for a 
time, but eventually they will assert themselves. 

During the war the price of wheat was fixt at $2.26 a bushel. 
Farmers in many parts of the country found that they could 
make twice as much by raising barley or oats and what could 
hinder their doing so? They were appeald to to raise wheat 
for patriotic reasons and on the whole they did so because we 
were at war. But in peace time no law could have prevented 
their raising, the crop that was the most profitable, and the 
supply of wheat would soon fall off. Then how could the price 
of wheat be kept at $2.26 when there was not enuf to go round 
and millions were offering a higher price? 

Before the war, German exporters might sell goods in foren 
territory at less than cost till they had destroyed competition 
and captured the market. They were either reimburst by grants 
from the treasury, or enabld to charge higher prices at home 
by a tariff on imports. The exporters of other nations could 
not compete; and while the doctrinaires of other nations were 
teaching that only the laws of supply and demand could regulate 
prices, the Germans did it and their commerce grew with un- 
precedented rapidity. As the world recovers from the war the 
same policy will be used by other nations. 



84 THE UNIVERSITY OF OKLAHOMA 

Are prices now made by competition? The formation of 
trusts and combines whose chief business is controlling prices 
is notorious. Of course those who enter such combinations al- 
ways deny it, and find plenty of people like the negative in this 
debate who will repeat their denials and perhaps believe them. 
The Sherman Act and the Clayton Act were passt by Congress 
and approved by the President and upheld by the Supreme 
court; if there are no combinations to manipulate prices what 
in the world were those acts ever passt for? 

It must be admitted that almost all economists are opposed 
to governmental control of prices. lU-informd persons some- 
times class economists with profiteers and the apologists of greed 
and oppression. Such persons have little apprehension of the 
enormous aggregation of facts and thorogoing analysis and com- 
prehension of them that are necessary to the establishment of an 
economic theory. The ignorant are prone to assume that every 
one else is equally so. We cannot answer facts by denunciation. 
They must be patiently and impartially examind and explaind. 
Only an economist can answer an economist. 

It seems to be assumed by the negative that a price-fixing 
commission is intended to set aside the law of supply and demand. 
The very converse is the truth. Such a commission must have 
some reason or ground for its decisions, and which are furnished 
by the facts of supply and demand. Which are the more likely 
to enforce the laws of supply and demand, a commission of econ- 
omists, impartial, capable, and considerate of all interests; or in- 
dividuals accustomed to charging all the traffic will bear and in- 
different to all but themselves; and where selfish profiteers com- 
pel all competitors to do the same or quit business. 

It must be admitted by every right thinking man that prices 
should be fair and reasonable. Of course, they should: the 
contrary is not debatable. It must also be admitted that Supply 
and Demand do not always give us prices which arc "fair and 
reasonable." It is only when they are well balanct or adjusted 
that they produce acceptable results. It is evident, then, that 
a price fixing commission is always needed: 1st., to decide if 
prices are fair and reasonable and interfere if they are not; 
2nd., To decide if supply and demand are properly functioning 
and if not to see that they are properly supplemented. 

Those who participate in the sale of grains, etc. in the great 
markets have no personal or selfish interests in the prices they 
make. The market indicates their very best judgment . as to 



GOVERNMENT PRICE CONTROL 85 

what, prices should he. If they are mistaken as to either supply 
or demand they lose. Their only chance of success is to under- 
stand thoroly all the causes that aflfect prices, be fully informd 
as to all the facts, and use their very l)est judgment concerning 
them. The men who trade in futures represent the very best 
judgment and knowledge that the human race possesses con- 
cerning prices. If they can't make right prices, who can? 

A price-fixing commission would be under tremendous pres- 
sure to fix prices to suit their own party. When a political 
party is victorious in an election it is very necessary that pros- 
perous times should follow. With the best intentions, even, a 
political commission would be influenced in its decisions 1)y party 
interest. Prices would come to be an issue in every political 
campaign which would inevitably become a gigantic gamble. 
Why any sane man would seriously propose to replace our present 
marketing machinery with a commision is past explanation. 
They surely know very little of how prices are made now. 

It is conceded by the negative and by all that monopoly or 
combination may entirely set aside the natural laws of supply 
and demand. It must also be conceded that monopoly and com- 
bination do actually exist and function in the life of today. But 
while conceding all this the negative claim that monopoly or com- 
binations have but little effect on prices. How do they know? 
And how can they ever find out without a commission duly au- 
thorized to find out? A commission that can get at all the facts 
and study their relations thorly and impartially? They object to 
a commission until after it shall have demonstrated its necessity. 
Nothing could be clearer than the fact that price-control can 
only be undertaken by an autocratic government. It is com- 
pletely and utterly antagonistic to our democratic institutions ; it 
cannot be enforced and leave men free. If the affirmative want 
price-control badly enuf let them spend part of their time advo- 
i:ating the overthrow of our government and crowning a Kaiser 
over us backt up by a gang of junkers like they had in Germany. 
But even the German autocracy could not make a success of 
price-control, because it can't be done. It is a plausible, visionary 
scheme. It never has workt in all history, and it never can 
work. 

The negative harp continually on the sufficiency of the laws 
of supply and demand to regulate prices. No one ever knows 
exactly v^hat liie supply or demand really is. The bulls under- 
estimate the supply and overestimate the demand as much as 
possible, and the bears do the opposite. Demands arc often 



86 THE UNIVERSITY OF OKLAHOMA 

fictitious. The demand of "shorts" for "cover", the demand of 
men trying to corner a market have just as much effect on the 
market as real, valid demand has, and the effects are not as 
ephemeral as the negative claim. Such things unsettle prices 
and dealers must keep them at the highest possible notch in order 
to protect themselves. 

In arbitrarily fixing prices, the benefit to one is possible only 
by the wrong done another. During the war the government 
did not reduce the price of agricultural machinery and other 
things that he had to buy. President Wilson referd to this in 
a message, and a great many prices were regulated but it was 
simply impossible to remedy the wrong done to the farmers. 
Doutless keeping the price of wheat down was a great blessing 
to the rest of the world, liut nevertheless it was done at the ex- 
pense of the farmers ; they were compled to contribute that 
much to the welfare of the world and have never been given due 
credit for the sacrifice. 

Something has to be done. It is costing so much to barely 
live that m.any are getting no satisfaction out of life: such a 
condition must be followd by anarchy or Bolshevism ; that is as 
certain as fate. The negative seem to think all we have to do is 
to fold our hands and the laws of supply and demand will take 
care of us. They oppose government regulation of prices but 
offer nothing else. We m.ay admit that we haven t Tearnt yet how 
to solve the problem satisfactorily, but we must learn. We can- 
not let middlemen make fortunes out of the woes of the world's 
laborers. The negative must either ofi^er a substitute for price- 
control or acknowledge defeat. 

Profits must be at least 2 1-2 times as great, measured in 
dollars, now as in 1914 in order to be equal. This would make 
a great difference in some of the estimates concerning the great 
increases in profits since then. Every rise in prices must be fol- 
lowed by a corresponding fall. Of course merchants make 
greater profits when they are buying on a rising market. But 
the time must come whhen they must buy on a falling market, 
when their profits must l)e small or changed to losses. To get 
at any fair result we must combine both of these periods. 
Doutless there are many who try to make their gains as large 
and their losses as small as possible, and that would happen under 
any system that could be devised. 

Demagogs have made a great fuss because of the profits of 
the steel companies during the war. The demand for steel was 
so great that the most important thing was to get as much 



GOVERNMENT PRICE CONTROL 87 

produced as possible. Winning the war depended on getting 
steel for rifles, cannon, ships, trucks, etc. The prices paid had 
to be fixt so that the high cost plants could operate ; but this 
gave the low cost plants enormous profits. Will the demagog 
please tell us how this could have been avoided? We got the 
steel in unprecedented amounts, the policy was successful. To 
parade the profits of a low cost steel mills to create the impres- 
sion that all mills made as much is not honest. 

Those who are manipulating prices keep up a great howl 
about the sanctity of the law of supply and demand and the sin 
and folly of interfering with it, when at the same time they 
themselves are violating the law and even making it an excuse 
for profiteering. They have done this until the public has 
ceast to have any confidence in that pretense. This is unfor- 
tunate for the making of prices is so infiinitly complicated that 
there is no better solution of the problem than the unobstructed 
working of that law. It is so often manipulated and set aside 
by monopoly or by abnormal conditions that a price fixing com- 
mission is needed to see that it is properly functions. 

With the government fixing prices, the chief contentions 
in every political campaign would the fixing of some price or 
])rices. The South would want the highest possible price for 
cotton; the manufacturing regions the lowest possible price. 
The manufacturing North East would want the lowest possible 
price for wheat and the west would the highest possible price; 
and these conflicting interests are absolutely • irreconcilable; 
they could never, never be settled finally so they would stay 
settled. There would be combinations of two or more regions 
against another; and in the next election a rearrangement. The 
price fixing proposal is a shortsighted, reckless proposal. 

The merchant cannot be justly blamed for this for he must 
make expenses or quit business. It is not real l)usiness unless 
he is making a profit. But the demagog howls: "What, not 
tax the rich merchants! We'll double their taxes instead of 
reducing them!" He does so, and increases the cost of doing 
business that much. Of course a business must pay its ex- 
penses before there is any profit and so the merchant's custo- 
mers pay it. And it is not paid by his wealthy customers only; 
but equaly as much by struggling laborers, by widows and or- 
phans. In this way the taxes of the rich are diminisht and the 
burden laid on the poor. Taxes must increase prices. 

The middlemen together with their salesman, agents, mana- 



88 THE UNIVERSITY OF OKLAHOMA 

gers, etc., have become a vast economic machinery which in- 
cludes near!}' half of the population of the country. They pro- 
duce nothing whatever, their only function is to "facilitate ex- 
change". Their chief business is serving each other and only 
indirectly the public. In the last analysis their chief function 
is selling goods to people who do not want them, at least enuf 
to buy them without their mediation. People would buy 
what fhey want anyway without the aid of salesman. Of course 
salesman may give consumers valuable information about goods, 
but the trouble is such information is notoriously unreliable. 

It must be admitted by all intelligent people that prices 
should be made by the facts, and that the pertinent facts are 
chiefly, at least, those of supply and demand. The real issue 
in this debate, then, is what is the best method of ascertaining 
the facts, a government commission or the wild horde of spe- 
culators and gamblers who infest the produce markets. That 
the government commission is superior is shown by the fact 
that their crop reports are so eagerly sought by all traders on 
the markets. It is a case where superiority is conceded even 
by rivals, for the produce exchanges maintain an extensive sys- 
tem of investigation of everything pertaining to supply and 
demand. 

The Federal Trade Commission, with better facilities for in- 
vestigation that any other investigators, reports hundreds and hun- 
dreds of cases of combinations to control prices. Hundreds of 
individuals and firms have been indicted by grand juries, and 
many have been found guilty by the counts and punisht. We 
have tried in every way possible to make business men compete, 
but we have not been successful, and yet the negative tell that 
they do compete and always have competed, and that there isn't 
any combination at all, or if there is, it is so insignificant that 
it has little or no eflfect on prices. How the combines must 
laugh in their sleeves at the stupid blindness of those who deny 
that they exist? 

The negative speak as if the same men were uniformly 
either bulls or bears. The fact is that the man who is a bull today 
may be a bear tomorrow. The negative give their case away when 
they call their prices makers "bulls and bears". We need MEN 
for that business, and the very best men we can get. No one 
ever lookt down on the howling hyenas in the Chicago wheat 
pit without wondering if that is really the best institution that 
civiliation can devise for making prices that affect the lives of 



GOVERNMENT PRICE CONTROL .89 

almost every human being on the earth. The negative seem to 
think that the bulls and bears are about equally balanct in num- 
bers and ability and constitute a most admiral)lc instrumentality 
for making prices. 

They tell us that business w^ants to be "let alone". So does 
the burglar, the swindler, and every other wrong door. The 
argument is not convincing, even if the negative do repeat it in 
this debate. The object of price-fixing is not primarily to bene- 
fit the business men who are chiefly interested in profits; its 
object is to help the widow struggling to feed her children and 
the multitudes to whom life is a hard, and sometimes a des- 
perate struggle for existence. Its object is to see that justice 
is done, that the poor shall not be starved in order that profi- 
teers may grow rich. Its object is to protect the producers 
who under our present system are so often robd of the just 
fruits of their labors. 

The mail order houses often oflFer lumber at much lower 
prices than local yards. When as lumber bill is presented to 
several yards and their estimates do not differ by a single cent 
in a total of several hundred dollars it is futil to denj' that there 
is more or less understanding between them. In a case before 
the Federal Trade Commission, docket No. 1, it was shown 
that 116 lumber companies together with a Trade Journal and 
a firm of detectives, conducted a regular campaign against the 
mail order houses for selling lower than the prices made by the 
combine. Which prices were most influenct by the laws of 
supply and demand, those made by the mail order houses or 
those made by the combine? 

Most human progress has been due to our learning how 
to use and utilize the laws of nature. Those who oppose any 
"interference" with them do so liecausc they find sucli nonin- 
ference is profitable to them. To. abandon all control of supply 
and demand would be like destroying our fire department be- 
cause it interfered with comubstion. The laws of combustion 
are infinitely valuable but they must be used, restraind, guided 
so that they do the will of man instead of destroying him or 
his property. The displays of electricity in a thunder storm 
were once considered revelations of the anger of Deity, but now 
it is one of our most wonderfully useful servants. And it is 
so with the laws of economics. 

Laws are too unwieldy for price-making. What would be- 
come of us if the legislature fixt the price of potatoes and yet 



90 ■ THE UNIVERSITY OF OKLAHOMA 

only met once in two jears? In uncertain times, prices change 
every day, and we could have no confidence in them unless they 
did, for we know that the factors on which they are based are 
constantly changing. Every act of the legislature must be tested 
by the courts which are usually several years behind their docket. 
Price-making is far more appropriately an executive than legis- 
lative function ; but the entire process of making, interpreting, 
applying, and enforcing prices require all the functions of gov- 
ernment-legislative, executive, and judicial — for without the due 
action of all these prices could not be just or right. 

The negative seem to think that the bulls and bears in the 
markets have the best possible facilities for learning all the facts 
concerning supply and demand. Why, then, do they try so hard 
to get hold of the facts of the government reports before they 
are issued? Why has the government been compeld to use such 
drastic means to prevent their leaking out? Simply because the 
government reports are so much more full, adequate, and re- 
liable that market manipulators will pay anything to get advance 
know-ledge of them. But altho the government reports are so 
much better than those of any other agency, it can make no use 
of them ; it cannot at present even use them for the benefit of the 
people. Their chief value is to those who buy and sell. 

Price regulation never has succeeded and probably never 
will. Why not trj- remedies which were never known to fail? 
Increase of production will lower prices. Devoting our energies 
to that will accomplish something. Diminishing demand never 
fails to lower prices. Let's do without everything that we can 
get on without ; let us refuse to pay unreasonable prices v.-her- 
ever we can do so. Let's reduce the cost of doing buisness. In 
other countries-England for example — cooperative stores do an 
enormous business and effect immense savings for their stock- 
holders and customers. Why can't we do that here? Let's try 
faithfully the unfailing remedies before we launch into methods 
v.hich can only end in overthrowing our social system. 

The U. S. Dept. of Agriculture is an immense concern and 
has connections reaching out to the smallest and remotest com- 
munities. It has facilities for ascertaining facts concerning 
products which are incomparably superior to those of any 
market in the country, and even to all of them combined. The 
contention of the affirmative is that we should have a court or 
commission which would see that prices correspond with the 
facts as found by the Dept. of Agriculture. When they do the 
commission would have no occasion to interfere and would not. 



GOVERNMENT PRICE CONTROL 91 

The simple fact that such a commission exists and has power to 
control to compel honest prices would restrain most of the evils 
now complaind of without interfering with economic laws. 

The reports of the Federal Trade Commission give an amaz- 
ing revelation of the methods used in business to prevent com- 
petition. It shows that enormous sums of money are spent in 
trying to establish monopolies and all the time their agents are 
vociferously denouncing all efforts of the government to 
establish fair prices. They assure us that the laws of supply and 
demand will regulate prices just right if the government will 
let them alone. If business can afford to pay so much to pre- 
vent the free action of the laws of supply and demand they 
could sell that much cheaper if such practises were stopt; yet 
well meaning people cry out against government regulation 
which is the only possible means of dealing with these evils. 

Altho the number of business firms is more than double 
that of 1881 the failures were less in 1919 than in any year 
sinc« then. They were a little more than one-third of the num- 
ber of failures in 1914. While some of this decrease may be due 
to improved business methods, most of it is due to the fact that 
business is so much more profitable; that is to say, profits are 
greater. Yet some would have us believe that business^ as a 
rule is not much more tlian making expenses. It is perfectly 
evident that the chief burden of the increast cost of living is not 
falling on those engaged in making profits. Everything shows 
that they are making more money than ever before. It is im- 
possible to reconcile this face with the claim that profits are no 
greater than common. 

If the government fixes the price of wheat it must also 
fix the price of flour as it did during the war. But the farmers 
want the price of wheat to be as high as possible, and the rest 
of the people want the price of flour to be as low as possible. 
The two interests are conflicting; absolutely so. If the party 
in power made the price of wheat low enuf to make flour cheap 
the farmers would vote them out of office. If thej^ made the 
price of wheat high enuf to please the farmers it would make 
flour high and the rest of the people would vote them out of 
office. The only government that could fix prices is an auto- 
cratic one that was inedependent; one like the Kaiser's that could 
boast of "me and gott" and go its way indifferent to appeals of 
all the rest of the world. 

The government could not fix the price of flour without 



92 THE UNIVERSITY OF OKLAHOMA 

also fixing the price of wheat from which it is made. If, for 
example, the government should require flour to be sold at $6 
a bbl. when wheat was $2 a bushel the mills would soon be 
bankrupt, and they would all quit making flour before bank- 
ruptcy was reacht. It is absurd, then, for the afifirmative to 
talk of fixing the prices of only a few of the necessities of life. 
It would be impossible for the government to fix the price of a 
few necessities without ultimately fixing the prices of every- 
thing; not only the prices of articles entering into the making 
of the articles whose prices were fixt, but also the prices of 
everything whose prices were higher and to which manufacturers 
might turn, wholly or in part. 

It is common for ignorant or poorly informd people to de- 
nounce the food markets as tho they were the cause of most 
our economic ills. Of course there are bad men who make a 
wrong use of anything. Patriotism, the church, benevolent or- 
ganizations have all been used as a cloak for scoundrels. It 
would be amazing, indeed, if there were not some who could 
abuse the markets. But the great majority of those engaged 
in the markets have nothing to gain and much to lose by any 
wrong doing. The rules of every Board of Trade do everything 
that human intelligence can suggest to prevent fraudulent deal- 
ing ; and any one found guilty of such is expeld from the Board 
and denied all its privileges. It is the purpose of every Board 
of Trade to keep itself above suspicion. 

The excuse for price-fixing is that interests combine and 
form monopolies. Well, then, the remedy is to stop the com- 
bines and prevent the monopolies. This may be hard to do but 
it is infinitely easier than fixing prices by law. The chief diffi- 
culty in preventing combinations is that it requires more gov- 
ernment oversight of and interference with private business than 
is possible without completely sacrificing all our individual lib- 
erties, and making our government more autocratic than Ger- 
many's was before the war. But even Germany was not able to 
prevent monopolies; her government never tried to. Mono- 
polies that "stood in" with the government or with influential 
oflFicials were undisturbd. There was no attempt, even, to se- 
cure "equal opportunity" so dear to Americans. 

The ideal price-making would be where nothing acted but 
natural laws and actual external facts. The thing we most need 
to escape is the personal element, — selfishness, self-interests, 
greed, etc. This our present system is admirably calculated to 



GOVERNMENT PRICE CONTROL 93 

do. Our prices are now made by those to whom low prices are 
just as profitable as high prices, and whose success depends en- 
tirely on correctly interpreting the present and rightly anticipat- 
ing the future. Laws made by men could not escape the per- 
sonal interests and ambitions of the makers. Even tho prices at 
times work hardships, we can sulimit to them more contentedly 
if we know they are made by objective facts, and that no one is 
exploiting us. We accept prices which are the result of natural 
causes as we do the weather ; but if we had government con- 
trol of weather we should have a rebellion every few days. 

The speculators and gamblers on the produce exchange 
make all possible use of the laws of supply and demand; why 
should not the rest of us have an equal right to use them, and 
to create whatever institution may be needed for the purpose? 
It is certain that tremendous interests are often arrayed against 
the normal working of those laws; why then should it be so 
wrong to work for them and with them? The negative argu- 
ment is largely special pleading. They argue that economic 
laws should have been "let alone" during the war when it is 
as certain as anything could be that if we had done so Germany 
would have won the war. It is impossible to resist the con- 
viction that they wish to be "let alone" for their own prof- 
it instead of the welfare of the public. In fact few of them 
would deny it. 

The nucleus of everytown is a middleman who is supposed 
to minister to the agricultural districts contiguous. But another 
middleman comes in because he thinks there is "room" for him, 
and the community has to support two families instead of one. 
There are few towns where business is not overdone, and busi- 
ness men are compeld to put up prices to where they can all 
live, and so consumers must pay for their own exploitation. 
By means of understandings, cooperation, or combinations 
prices may be made just as high as the people will pay. The 
remedy for this is cooperative stores which have been so suc- 
cessful in England, but which have never been as successful 
here. The first step in reducing the cost of living is to cut out 
all unnecessary expenses between producer and consumer, in- 
stead of trying government price contFol. 

Every demand for a fixing of prices by the government is 
in reality a demand for an autocratic government, — the only 
kind of government that is able to do it. Such a policy is ut- 
terly imposible under a democracy where the "government" 



94 THE UNIVERSITY OF OKLAHOMA 

is the people themselves or their representatives. The price that 
suits one part of the people oppresses other portions, and the 
attempt to fix prices would introduce such strife and contention 
that no government could possibly survive it. There could be 
no worse way to fix prices that that. It is hard enuf to preserve 
the unity and solidaritj'^ of our people as it is; it has always been 
one of our most difificult problems. It was the difference in the 
way slavery aiit'ected the vital interests of people in different 
parts of the country that caused the Civil War. We must 
minimize the causes of war instead of increasing them. 

During the last two centuries there was an economic doc- 
trine known as "laissez faire" (lassay fare) which argues that 
government should not interfere in economic matters, that 
natural laws are entirely sufficient without any human aid. 
Recent studies and investigations have completely discredited 
the doctrine but still it lingers. At present it is thought of 
chiefly as an alleged excuse for laziness or indifference. It was 
popular doctrine two or three centuries ago but it is decidedly 
out of date at the present time. The first man who carried an 
umbrella in New England narrowly escaped being mobd for 
interfering with the working of natural laws; it was thought 
to be "flying in the face of Providence"; if the creator did not 
mean that the rain should wet us he would not have made things 
as he has. This sounds very much like some of the negative 
argument in this debate. 

Prices are not, and do not pretend to be rational, just, or 
propitious. The price of cotton for example, has never contem- 
plated a living wage for the producers. The chief workers were 
the negros in the South who were supposed to be incapable of 
self-defense and willing to live in squalid poverty, and we have 
got used to expecting a price for cotton which will compel the 
continuance of such conditions. It is only recently that cotton 
producers have been able to get together enuf to exert any in- 
fluence on prices. It is said that a few j-ears ago at a confer- 
ence of cotton producers it was resolved to reduce the acerage 
of cotton, and then the delegates went home and put in more 
cotton than ever because each expected that the others would 
not, and the scarcity would make prices higher, and they wanted 
a big crop to take advantage of it. Supply and demand may, 
themselves, be manipulated. 

While we say that prices are chiefly dctermind liy supply and 
demand, many other factors or influences enter in to the making 



GOVERNMENT PRICE CONTROL 95 

of a price. The chief is the cost of production. If the price 
offerd for an article is considerably more than the cost of pro- 
duction the supply will increase until it will overbalance the de- 
mand and the price will fall. On the other hand, if the price 
ofTerd is less than the cost of production the supply must de- 
crease and that would inevitably raise the price. It is evident 
here, however, that the cost production acts only thru supply 
and demand. But the cost of production does not always con- 
trol the price. The farmer, for example, must produce crops 
or starve. He must of course get the cash cost of his crop back 
or he would not be able to continue at all ; but lie may not get 
a sufficient remuneration for his labor, and so may produce crops 
but constantly grow poorer. 

Fixing prices is clearly outside the normal functions of gov- 
ernment. Fixing prices by the government means simply that 
tliey will be fixt by politicians. They cannot possibh' be as well 
posted as the bulls and bears in the regular markets who spend 
their lives studying everything pertaining to prices and their 
changes. The politicians could not do that if they would ; there 
is too much else for them to study. And besides, they could 
not be impartial; they would be interested judges deciding a case 
in which they are interested. But the bulls and bears in the 
market are absolutely impartial. Prices going down make them 
iust as much as prices going up ; they are interested only in mak- 
ing a profit ; and if one man is trying to lower a price another 
one is trying equally hard to raise it; and the man wins who 
gets the most facts and interprets them the most correctly. Leg- 
islators simply cannot do this. 

The negative compare the laws of supply and demand to the 
laws of gravitation. There is no comparison possible between 
them. The laws of gravitation are specific, definite, and work uni- 
formly under all conditions. But the laws of supply and demand 
compel nothing. They only afford a psychological excuse. They 
act altogether by influencing the mind, and the effect they have 
depends altogether on the condition or state of mind they act 
on. The same conditions of supply and demand would not afifect 
any two minds exactly alike. A great market is one of the worst 
places for panics in the world. The men in the wheat pit in 
Chicago sing all kinds of songs, get tremendously excited, and act 
more like lunatics than men who are seriously trying to make 
prices for the farmers of America. Any one who would say 
that such a mob is better qualified than a government commission 
to make correct prices is a — well it wouldn't be polite (o say. 



96 THE UNIVERSITY OF OKLAHOMA 

In every market there are what are calld "bulls" and "bears" ; 
the bulls try to raise prices and the bears try to pull them down. 
The bulls do everything in their power to raise prices ; they re- 
sort to every possible influence ; they make the most of every 
fact ; they do all that is liumanly possible to make prices higher 
for it is only liy raising prices that tlicy can make any monej". 
On the other hand, tiic licars try equally hard to lower prices 
for that is the way they make their money. These men learn 
the game thorbly, and play it with almost superhuman shrewd- 
ness and courage. They maintain agencies all over the country 
for gathering exact information ; nothing is overlookt ; a rain in 
Oklahoma will affect the price of wheat in Chicago and Liver- 
pool. These men become experts and thru them the facts as to 
supply and demand become efifective. And in the long run their 
judgment holds with few exceptions. Sometimes they miss it; 
but wc may be sure that when they do no human intelligence 
could do any better. 

It is argued that societ}^ has never yet succeeded in con- 
trolling prices, except for a very short time. Against this two 
patent facts stand out mistakable: first, there has never been 
such a need for it, or a need so wide-spread and threatening; 
second, we know more about the procesess of business now, and 
have more facilities for tracing effects to causes. The argu- 
ment of the negative is the very identical argument we have 
always had from those who are evploiting the public; — "let us 
alone". Of course every profiteer will applaud the arguments 
of the negative. No doubt about that. But how does the nega- 
tive argument help us? How does it help to strengthen the 
yielding foundations of civilization? We do not charge that 
the negative have caused the conditions that confront us, but 
we must say that they are doing nothing whatever to help those 
conditions. While Rome is burning they may not be exactly 
fiddling but they are giving us learnd essays to prove tliat the 
fire cannot be put out. 

The sole object of every Board of Trade is to facilitate 
trade and commerce. They have grown out of human needs and 
an infinite amount of experimenting ; and the modern Board of 
Trade represents the very highest achievements of commercial 
genius and efficiency. If a Trade organization should counten- 
ance fraudulent dealings of any kind it would inevitably dimin- 
ish their business. No market organization could posil)ly make 
as much by permitting fradulent practices as it would by rigidly 



GOVERNMENT PRICE CONTROL 97 

excluding them ; lack of confidence could not possibly facilitate 
trade. The charter of the first Produce Exchange in the United 
States states as its purpose : "To provide and regulate a suit- 
able room or rooms for a Produce Exchange in the city of New 
York, to inculcate just and equitable principles in trade, to es- 
tablish and maintain uniformity in commercial usages, to ac- 
quire, preserve, and disseminate valualile business information, 
and to adjust controversies and misunderstandings between per- 
sons engaged in business." 

The present high cost of living is threatening the very ex- 
istence of civilization. If it be really true that nothing what- 
ever can be done then nothing can prevent a headlong plunge 
Iff civilized society into Bolshevism or worse. We must recog- 
nize that the situation is absolutely intolerable. We have no 
choice about it; a way to reduce prices MUST be found. We 
have price control in war. We must have it then; all nations 
alike practise it. But the emergency of peace times is becoming 
equally great. We face a condition, not a theory; a condition 
which is inexorable, and which cannot be trifled with. In past 
times great fortunes have always foUowd in the wake of war; 
where do they come from? There is but one adequate answer; 
their source is to be found in the higher cost of living. It may 
be admitted that the processes are obscure and very hard to 
trace, especially if we begin at the wrong end. When a few 
get rich at the expense of the many the public has a right to 
demand that the utmost light be thrown on the means, methods, 
and sources of acquirement; a price control commission can 
do it. 

It is a common practice of manufacturers to guarantee that 
the prices of their products will not fall. This makes customers 
buy more freely ; they will not wait for lower prices. If the 
manufacturer should lower the price of an article, then, he 
would not only make less but would have to indemnify his cus- 
tomers who had purchased at higher prices. On the other hand, 
if the maunfacturcr should raise the price on articles his cus- 
tomers would immediately raise the price of what they had pre- 
viously bought, which would be clear profit. The manufacturer, 
then, who wishes to please his customers is very strongly influ- 
enct to keep princes up. More than two hundred persons testi- 
fied before the Federal Trade Commission that this practise was 
one of the chief reasons why prices kept up. lender such condi- 
tions the manufacturer would certainly keep prices up just as long 



98 THE UNIVERSITY OF OKLAHOMA 

as possilik'. Witli a little cooperation amon.in manufacturers it 
would be much easier to boost prices than to lower them. In 
such a condition, supply and demand have little or no influence 
on prices. 

The evidence submitted to the Federal Trade Commission 
show some of the methods used to establish monopolies and 
ultimately to raise prices. Immense sums are spent in bribing 
the employees of competitors to be disloyal to their employers; 
in bribing employees of possible customers to use their in- 
fluence with their employers; giving special gifts, discounts, 
bonuses as bribes to customers to deal exclusively with the 
bribers ; in fixing retail prices and refusing to sell to retailers 
who do not maintain the high prices thus dictated ; in main- 
taining an army of spies who follow the salesman of compe- 
titors; in cutting the price of a commodity till competition has 
been destroyed and then raising the price enuf to recoup them- 
selves for losses in securing the monopoly, thus making their 
customers pay the cost of their own robbery. Such things 
have been going on for years and are rapidly growing worse. 
Honest business men are helpless; they must do what their com- 
petitors do or quit business. Yet the negative tell us that supply 
and demand make prices and the government should not inter- 
fere. 

Every Produce Exchange has a Committee on Complaints 
before v»hich are brought all complaints concerning acts which 
have been injurious to any member. If the person complaind 
of is found guilty he is censured, suspended or expeld accord- 
ing to the character of the act complaind of. No where else on 
earth are the rules of business conduct so rigidly and thoroly 
enforced. Suppose that on Jan. 1 a milling firm is askt to bid on 
a shipment of flour to he made on July 1. The price of wheat 
might change between Jan and July and it is impossible for the 
miller, to tell at what price he should make in his l)id. Since 
there is competiti>'n he must approximate very closely. He goes 
on "Change and finds a number of experts with all possible 
facilities for judging the probable price on July 1. and makes his 
bid at the price they have fixt for that date. He may, if he 
wishes to be still more safe, buy a "future" of the same amount 
of wheat as that required fol- his bid. This would insure him 
against any loss, for if the price July 1 should be lower than 
he expects he would gain on liis bid but lose on his "future"; if 
the price should be higher he would lose on his bid but gain on 



GOVERNMENT PRICE CONTROL 99 

Ill's "future". By this means 1)usiness men may safely make 
contracts to lie filled in the future. 

It is freely admitted by all students of the subject that 
l^rices of farm products have always been too low. This is 
".specially true of wheat and cotton, for example. The opposi- 
tion to government price regulation insist that this must 
continue until agricultural labor shall become unrequited toil, — 
practically slavery — ,and the very foundations of civilization 
be destroyd. Cotton "can only be raised in the United States 
at customary prices by condemning millions of negroes and 
poor whites to poverty and ignorance. The drift to the towns 
and cities is showing the effects of too low prices on other 
farm products. It is certain that trade processes or conditions 
cannot correct this evil; they are constantly making it worse in 
spite of all efforts to the contrary. At present the rights of pro- 
ducers are not considered at all in price-making. As long as far- 
mers will accept a given price it will not rise, and there are al- 
ways farmers who are compeld to sell for what they can get in 
order to meet present necessities and obligations. And even 
those who might combine for self-protection are so isolated 
that they cannot. Government must interfere or sovietism 
must replace our present methods of government. If civiliza- 
tion does not protect the farmer, he must find ways of protect- 
ing himself. 

There are but two classes to be considered: the makers and 
the users; the producers and the consumers. .\t present these 
two c'asses have little or nothing to say about prices. Between 
these two classes are hordes of what are calld "middle men" 
who are supposed to exist because they render some service to 
the makers and users; they are supposed to be in business for 
that purpose and they are tolerated for that reason. But 
middle men tell us that they are not in business for their health, 
or for alturistic reasons, but solely to make all the profits they 
can. They exert all possible pressure on the producers to m.ake 
them sell at a lower price than they ought to; and upon the 
consumers to make them pay more than they ought to. Here 
is a field for rational and practicable effort. The chief busi- 
ness of towns is to act as middlemen, and the towns are growing 
apace. It is evident that there is too much "spread" between 
producer and consumer. If half the cost of articles is the cost 
of selling them, then it is evident that half the cost of living 



106 THE UNIVERSITY OF OKLAHOMA 

is due to the machinery of distribution between the producer 
and consumer between whom there are two or three classes of 
middlemen, each of which must not only be supported but must 
make a profit. It is noticeable, too, that it is among these 
middlemen that most of the great fortunes are built up. It is 
evident that the different classes of middlemen are of great 
value to each other, or at least a verj^ great convenience; but 
it is not so clear that their services are equally valuable to the 
producers and consumers. 

Debaters must note the confusion of meanings of the words 
"supply" and "demand". Ordinarily "supply" means the avail- 
able amount on hand; but in connection with markets the mean- 
ing is not the amount on hand but the amount the owner will 
sell at a given price. If the price were higher he might sell 
more; if lower he would sell less, tho the "amount on hand" 
would be the same in each case. Suppose A has 1,000 bu of 
wheat to sell for which he asks $2.25 a bushel. B wishes to 
buy 1,000 bu. and offers $1.75 a bushel. There is neither supply 
nor demand in the market sense. A decides that he will offer 
500 bu at $2 a bu. and hold the rest in hope of a higher price. 
Suppose also that B decides that he will pay $2 a bu. for 500 bu. 
in the hope that he will be able to buy the other 500* bu at a lower 
price. This is calld the balancing of supply and demand. The 
"supply" in this case is 500 bushels and the "demand" is 500 
bu.; the amount on hand or the amount needed has nothing to 
do with it. Supply and demand is the amount that will be 
traded at a certain price. Is not price involved in supply and 
demand? Certainly. The fact that the trade occurd shows that 
])oth parties considerd the price satisfactory, or at least suffi- 
ciently so to make them trade. This price, while not binding on 
others, is apt to be accepted by them and other trades made 
at the same price. The market report for the day will say that 
500 bu of wheat was sold at $2 a bu. If there were sales at other 
prices the report will give the highest and lowest. If no sales 
occurd the report will give the prices "bid" and "askt". These 
reports go all over the country and from them both buyers 
and sellers decide what prices are safe. 

Opponents of government price control argue that there is 
no profiteering because it is so hard to prove it. In the nature 
of the case such things are almost impossible of proof, it is 
hard to get evidence. But that does not disprove. Miss Edith 



GOVERNMENT PRICE CONTROL 1*1 

Johnson quotes in an editorial: "in the last three years the 
American people have paid in net profits every dollar's worth 
of stock in coal companies and all corporations in the essential 
lines of industry and trade." Senator Capper read a statement 
in the U. S, senate which no one has attempted to deny from 
the following facts are culled: 

Increase In Value of Shares or of Surplus 

Amer. Beet Sugar from $6 a share in 1918 to $15 a share in 
1919. 

Amer. Hide & Leather Co. from 44c a share in 1914 to 
$15.52 a share in 1919. 

Pittsburg Tin Plate & Steel Corporation Common Stock 
1,500%. 

Central Leather Co. Surplus from $7,750,000 in 1914 to $31.- 
250,G00 in 1919. 

United States Steel surplus increast $500,000,000 a year f«r 
last five years. 

Increase in Profits 

Amer. Sugar Refiining Co. from $12,000,000 in 1918 to $15.- 
©00,000 in 1919. 

Amer. Fruit Co. in four years, 140%. 

Central Leather Co. doubled in four years. 

Standard Milling Co. 100% in last four years. 

National Enamel & Stamping Co. 326% in last three years. 

Amer. Hide & Leather Co. 350% since 1914. 

National Canning Co. 545% since 1914. 

Burns Bros. Coal, from 23 l-2c a ton in 1916 to 40|c in 191f. 

United Drug Co. 242% since 1916. 

American Ice Co. 283% since 1916. 

Tobacco Products Corporation 1,547% since 1914. 

Dividends Declared 1919 

Continental Oil 200'/; 

United States Fuel Gas 200*/«- 

Ohio Fuel Supply 1 100% 

Nonquit Spinning Co 100% 

Amoskeag Cotton Mfg. Co 100% 

International Motors 100% 

Stutz Motors 100% 

Nashua Mfg Co 100% 



102 THE UNIVERSITY OF OKLAHOMA 

QUESTIONS TO AID STUDY 

1. Are prices always just right, everything considerd? 2. 
Should prices always he just and reasonahle? 3. When are ihey 
"just" and "reasonahle?" 4. Are prices independent of the 
ordinary ohligations of justice and humanity? 5. If a high 
price produce great suffering among the poor, should it he low- 
erd? 6. If a low price i)f wheat or cotton cause great loss to 
farmers should it Ije raisd? 7. If the price of milk goes up is 
somebody guilty of murder? S. Do prices affect the value of 
wages? 9. The value of property? 10. Do high prices increase 
profits? 11. Would that stimulate husiness? 

12. W^ould low prices deprive some people of part of their 
means of living? 13. Should some persons make money out the 
hard necessities of others? 14. Should a merchant work for 
nothing? 15. Is it right to luiy everything as cheap as you can 
and sell for as much as you can? 16. What is a "fair" price? 
17. If you can produce at lower cost should you not undersell 
your customers and take their business? 18. Are you entitled to 
the benefit of your superior knowledge and skill? 19. What is 
the right attitude towards customers, — make all you can out of 
them, or try to serve th.em? 20. If the former, will you keep 
their trade- 21. If the latter, will you fail in liusiness? 22. 
Should one earn the profits lu- makes? 23. If a profit is not 
earnd is it stolen? 24. Shnuld everyone render a full ecpiiva- 
Icnt for all his profits? 

25. Do we know exactly what fixes prices? 26. Should we 
know if we try to regulate tliem? 27. How does the "supply" 
of wheat differ from the "availalile amount" of w^heat? 28. 
Could supply ever he zero when the available amount was very 
large? 29. How docs "demand" dift'er from "desire" or 
"need"? 30. Could demand ever be zero when there was great 
need? 31 What, then, is supply and demand? 32. Would the 
price at which tlie maximum trade occurs he the correct price? 
33. Would it be the fairest that it is possible to get? 34. Can 
actual supply and demand be determind without a free market? 

40. Should the government keep markets free and untrammeld? 

41. Is there any sulistitute for markets? 42. Why was the mar- 
ket place so important in ancient cities? 43. Is it necessary for 
the actual goods to be present in the market if there are sufi- 
cient guarantys as the amount and ([uality? 44. What are "Inills" 
and "bears" in the markets? 45. What are "longs" and "shorts"? 
46. What is a "corner"? 47. Suppose A buys 1,000 I)u -of 
wheat from T> to be deliverd 6 mimths from now, at $2 a busliel ; 



GOVERNMENT PRICE CONTROL 103 

ami that wlun that time comes wheat was selling at $2.25 a 
bushel, how would each of them be affected? 48. Would A try 
to raise the price or lower it? 49. Would he be a "bull" or 
"bear"? 50. Suppose that at the same time, A sold 1,000 bu of 
wheat to C at $2. a bu to be deliverd six months later, when the 
price was $2.25, would he be a bull or a bear in that transaction? 
51. Under such conditions would men test market conditions 
thoroly? 52. Would they learn everything that affects prices? 
53. Under what conditions would bulls change to bears? Must 
those who trade in the market keep well posted, or merely trust 
to luck? 54. Must a trader lose unless his predictions are cor- 
rect? 55. Would the members of a government commission gain 
or lose according to the correctness of their predictions? 56. 
Should a man make prices for others which he does not risk 
himself? 

57. Is supply and demand the only thing that affects prices? 
58. Should the cost of production be considerd? 59. Is it con- 
siderd in the prices of agricultural products? 60. Can any one 
afford, as a rule, to pay more for an article than he has to? 61. 
Does the amount of money in circulation affect prices? 62. 
Would people bid higher for what they want when money is 
plentiful -63. Is that the same as increasing the "demand"? 
64. Could any law prevent them from paying more for what 
they want? 65. Would combinations of buyers or sellers affect 
prices? 66. Would competition prevent combinations? 67. Can 
we trust supply and demand where there is little or no competi- 
tion? 68. Arc competitors natural enemies who have a right to 
beat each other all they can? 69. Is competition a kind of 
war? 70. Sould the law compel men to fight each other? 71. 
Can we have fair and just prices without competition? 12. 
Should the gTivernmont regulate prices where there is no com- 
petition ? 

12). Are prices made by men or by conditions? 74. Must 
condition's be rightly interpreted? Iz'. Should the state see that 
prices are in accordance with supply and demand? T^. Do 
middlemen affect the prices to ultimate consumers. 11. If we 
did away with mitldlemen would it greatly diminish towns and 
cities? 1'^. Would that hinder the advance of civilization? 79. 
Is money made more easily in trading than in producing? 80. 
Does that make too many traders? 81. Could producers and 
consumers get together efficiently without the aid of agents, mer- 
chants, traders, — middlemen? ?>1. How can producers get into 
best touch with consumers? 83. Does the iModucer need to sell 



104 THE UNIVERSITY OF OKLAHOMA 

soon after production? b'A. Can he store goods while waiting 
for customers? 85. Is it better for him to sell at wholesale or 
retail? 86. Can he sell cheaper at wholesale? 87. Would sell- 
ing products liy producers hinder the making of them? 88. Is 
it better for all that the work of selling and making be separated? 
89. Do salesmen have to run risks? 90. How could they meet 
losses? 91. What effect w^ould business uncertainty have on 
prices? 

92. Are there too many middlemen? 93. Suppose busi- 
ness is already overdone in your community and a new firm comes 
in, what can be done about it. 94. Should the other firms agree 
to raise prices so that all may live? 95. Should the weakest 
•firm be driven out of Inisiness? 96. Should the public be askt 
to support more firms than are needed? 97. Are merchants 
justified in trying to prevent ruinous competition? 98. Should 
new firms be required to get a license before beginning business 
in a community? 99. Do middlemen raise prices to ultimate 
consumers? 100. If there is excessive "spread" between pro- 
ducer and consumer does it indicate excessive expenses, risks, 
or profits? 101. Why do so many middlemen get rich? 102. 
It is a common saying that it costs as much to sell an article as 
to make it; is that right? 103. Should one who knows just 
what he wants have to pay as much to have it sold to him as it 
costs to make it? 104. When a man needs something for a cer- 
tain purpose how can he best find out what will fulfill it? 105. 
Do stores help? 

106. Should the public have a voice in interpreting supply 
and demand? 107. Or should it be left entirely to merchants 
and tradesmen? 108. Who is to determine if prices are just and 
reasonable? 109. Do bulls and bears balance each other in the 
long run? 110. Can they be trusted to do full justice to all 
concernd? 111. Would government regulation of prices abolish 
supply and demand as a price making influence? 112. Could 
the government see that producers of necessities get remunera- 
tive prices? 113. Is the tariff such an attempt? 114. Can 
'reasonable profits" be guaranteed to both low and high cost 
producers? 115. Would a skilful, enterprising farmer be will- 
ing to have his shiftless, mismanaging neighbor paid a higher 
price because his production costs were higher? 116. Would 
such a policy be sure to be abused? 117. Might price control be 
necessary in war time? 118. Is there a crisis for the poor all 
the time? 119. Could licensing dealers prevent profiteering? 
120. Is there anv limit to the demand for necessities? 121. 



GOVERNMENT PRICE CONTROL 105 

Would that affect the "demand" for them, and hence the price ? 
122. Can we do without milk, whatever the price? 

123. Can the prices of necessities be regulated without reg- 
ulating everything used in their production? 124. Could you 
regulate the price of milk without regulating the price of cow- 
feed? 125. The wages of laborers? 126. If the farmer does 
not get as much for cow feed as for other farm products will 
he raise cow feed? 127. Might lowering the price of milk re- 
sult in diminishing the supply? 128. Might a higher price of 
milk be a lesser evil? 129. Could the farmers he compeld by law 
to raise what the public needs? 

130. If the government lowerd the price or cotton would 
it affect the southern states and the manufacturing states alike? 
131. Would that make sectional strife? 132. Would a similar 
thing be true of Wheat? Of Iron? Of Coal? Of Sugar? 133. 
Could all sections be dealt with equitably by a government com- 
mission? 134. Would such a policy endanger the unity of the 
nation? 135. Could any price Ije raised without diminishing 
consumption, or lowerd without diminishing production? 

136. Why were the merchants of other nations unable to 
compete with Germans before the war? 137. Will other nations 
be likely to try the German method? 138. Brazil has bought up 
her coffee crop to prevent its being dumpt on the market all at 
once; is that right? 139. Would this policy benefit the citizens 
of Brazil? 140. Should we adopt it for wheat, cotton, etc.? 
141. If one nation does this will the others be compeld to? 142. 
How would this affect world peace? 143. Why should the 
League of Nations undertake to regulate international economic 
relations? 144. Could an international court do it without a 
League to enforce its decisions? 145. Would those who do 
not mean to trade fair be opposed to a League of Nations? 

146. Should consumers have a voice in making the prices of 
necessities? 147. Do they have it now? 148. Can they affect 
prices by refusing to buy? 149. Are producers compeld to sell? 
150. Would cooperative buying and selling help? 151. Would 
practising economy help or injure trade? 152. Would the con- 
sumer's knowledge of quality of goods help business? 153. 
154. If prices were reduced by the government would quality 
deteriorate? 154. Might government regulation of prices 1)ring 
greater evils than those it aims to remove? 155. Is the pro- 
))lem insoluble? 



106 THE UNIVERSITY OF OKLAHOMA 

BIBLIOGRAPHY 

(The first numher is the volume; the second numlier the page) 

AMERICAN ECONOMIC REVIEW: Amer. Economic 
Assn. Ithica, N. Y., $1.25. 

6:26-9. Mar. '16: Tariff and the Ultimate Consumer. H. A. 
Wooster. 

6:49-60, Mar. '16: Iniluence of Speculative Marketing on Prices. 
A. P. Usher. 

7:331-52, Jun. '17; Open Price Association. H. R. Tosdal. 

8:sup. 239-56, Mar. '18; Value & Price Theory and Price- 
Fixing. B. M. Anderson. 

9:47-56, Mar. '19; Price-fixing in Competitive Industry. A 
Pioneer Case. L. H. Haney. 

9:Sup. 61-78, Mar. '19; Provisions of the Food x\ct made 
permanent. W. F. Gephart. 

9: Sup. 233-45, Mar. '19; Some Purposes and Results of 
Price-fixing. G. F. Warren. 

9: Sup. 246-51, Mar. '19; Possihilities of Price-fixing in Peace 
times. T. N. Carver. 

9: Sup. 252-71, Mar. '19; Price-fixing Policies of the Food 
Administration. L. C. Gray. 

9: Sup. 272-9, Mar. '19; Price-fixing: Discussion. 

(Every team should have Vol. 9 Sup. on Price Fixing.) 

10: Sup. 156-85. Banking Policy and the Price Situation. 
H. G. Moulton. 

ANNALS AMERICAN ACADEMY: 36 and Woodland, 
Philadelphia, Pa. $1.25. 

74:224-35, Nov. '17; Necessity for Gov't. Reg. of Prices in 
War Time. C. H. Van Hise. 

74:256- Nov. '17; Constitutionality of Federal Regulation. 
Clifford Thome. 

74:280-7, Nov. '17: Price Control thru Industrial Organiza- 
tion. J. R. Smith. 

74:288-93, Nov. 17: Price Control. J. E. Davis. 

82: 306-22, Nov. '17: Rectifying the Price Situation. A. C. 
Miller. 

89: Parts I-VIII. This numluv contains 253 pp of fine dis- 
cussion. Every Team should have it. There is nothing hetter. 

.A.TL.\NTIC MONTHIA'. 41 Mt. \'ernon St.. Boston Mass. 

35c. 

116:668-77. Nov. '15; Prices According to Law. A, A. Bal- 

lantine. 

125:524-7, Apr. '20: Profiteering and Prices. W. T. Copeland. 



GOVERNMENT PRICE CONTROL 107 

CENTURY MAGAZINE. Century Co. N. Y. 35c. 

93:605-11, Fell. '17; Can a Democratic Govt. Control Prices? 
Davies-Creel. 

THE FORUM. 118, E28, N. Y. 35c. 

56:762-8. Dec. '18: Price of Prosperity. G. Weiss. 

60:257-66, Sep. '18; The Wheat Farmer's Dilemma. T. P. 
Gore. 

THE INDEPENDENT. 119 W 40. N. Y. 15c. 

89:560 Mar. 26 '17; Finance and the Farms. W. P. G. Hard- 
ing. 

91:112 Jul. 21 '17; Patriotism and Profits. Pres. Wilson's 
Message to Business. 

92:134 Oct. 20 '17: Is Price Fixing Possil)le? J. E. Davies. 

99:216-7 Aug. 16 '19: What the Economic Crisis Calls for. 
^. H. Giddings. 

99:249-50 Aug. 23 '19; Mr. Wilson on the Cost of Living. 
F. H. Giddings. 

99:277 Aug. 30 '19; Price-Fixing in Other Days. 

100:167 Dec. 13 '19; How to Bring down Prices. A Alitch- 
cll Palmer. 

102:159 May 1 '20; The Only Cure for the H. C. L. Royal 
Meeker. 

ILLUSTRATED W^ORLD. Drcxel Ave and 58. Chicago. 111. 
25c. 

25:603-6 July '16; Bidding against the World. C. D. Murphy. 

26:937-40 Feb. '17; New Methods of Price Raising. M. 
Stratton. 

31:941-2 Aug. '19; Keeping up Wages as well as Prices. R. 
Rankin. 

JOURNAL OF POLITICAL ECONOMY. University of 
Chicago Press, 30c. 

24:183-4 Feb. '16; New Study of Index Numbers. 

27:73-94; 188-209; Price Fixing in Revolutionary France. H. 
E. Bourne. 

27:405 May '18; Price-Fixing Experiment. 

27:505-6 Jun. '19; End of Government Price-Fixing. 

FORTNKiHTLY RFATFAV. Leonard Scott Puli" Co 249 
W 13. N. Y. $6 a year. 

112:692 Nov. '19; Price-Fixing I)y Law. C. C. Wade. 

112:845 Dec. '19; Currencv, Prices, and Rates of Exchange. 
W. F. Ford. 

LITERARY DKJEST. Funk & Wagnalls. N. V. Citv. 10c. 

65:22 May 22 '20; Profiteering and High Prices. 



108 THE UNIVERSITY OF OKLAHOMA 

65:27 May 1 '20; Strikes as a Revolt against High Prices. 

65:132 May 1 '20; World-wide Price Trend still upwards. 

65:30 May 8 '20; Profiteers Jaild and Unjaild. 

64:64 Jan. 3 '20; More Light on the Wliys and Wherefores 
of High Prices. 

64 :78 Jan. 24 '20 ; Refusal to buy as a remedy for High 
Prices. 

64:110 Jan. 17 '20; Are Druggists Profiteers? 

64:11 Jan. 3 '20; Will Unscrambling the Packers Reduce 
Prices ? 

64:20 Feb. 21 '20; Shoe and Clothing Prifits. 

64:139 Mar. 6 '20; Cost of Living in Paris. 

63:92-4 Oct. 11 '19; Price-Fixing in Iron and Steel during 
tlie War. 

63:18 Dec. 20 '19; The Farmer not the Villain, etc. 

63:84 Dec. 27 '19; Reckless Buying Makes Higher Prices. 

62:21 Aug 22t '19; England's Big Stick for Profiteers. 

61:15 May 24 '19; End of Price Fixing. 

57:92 Apr. 27 '18; Why Prices are so High? 

56:18 Mar 16 '18; Is Wheat too Cheap? 

55:18 Jul. 28 '17: Profits, Prices and Patriotism. 

54:703 Mar. 17 '17; Cause of High Prices. 

LIVING AGE. 41 Mt. Vernon St. Boston, Mass. 15c. 

302:632 Sep. 6 '19; High Prices and Profiteering- A British 
View of the Problem. 

MONTHLY LABOR REVIEW. U. S. Bureau of Labor 
Statistics. Write to your Congressman. 

Price Tables on the Cost of Living: 10, 1:69-117 Jan. 
'20; 10, 2:57-99 Feb. '20; 

10 No. 4:68-92; etc. (Every month there is an article on 
this subject.) 

Articles: 10 No. 5:21-45; .Apr. '20; Price Fixing during 
the war. F. C. Stoddard. 

10 No. 2:399-401 Feb. '20; Improbability of Decrease in 
Prices or Cost of Living. Royal Meeker. 

9 No. 6:22-41 Dec. '19; Family Incomes and Cost of Living. 

9 No. 5:1-19 Nov. '19; Clothing and the Cost of Living. 

8 No. 2:1-25 Aug. '19; A Study of Food Cost in Various 
Cities. W. F. Ogburn. 

9 No. 1:1-13; July '19: What is tlie American Standard of 
Living? Royal Meeker. 

Government Price Control. Paul W. Garrett. 834pp. 
THE NATION. 20 Vesey St, N. Y. 15c. 



GOVERNMENT PRICE CONTROL 109 

105:58-9; Jul. 19 '17; The President on War Prices. 

105:231; Aug. 30 '17; Government Price-fixing; Now and 
i.ater. 

106:468; Apr. 18 '18; Steadying Prices in Australia. 

108:302-3; Feb. 22 '19; Regulation of Prices in Russia. 

108:439; Mar 22 '19; Cooperation to Lower Commodity 
Prices. W. J. Boies. 

108:562; Apr 12 '19; Stableizing Industries. W. J. Boies. 

110:417; Apr 3 '20; Cause of High Prices. 

NEW REPUBLIC. 421, W 21, N. V. 15c. 

11:352-4; Jul 28 '17; Wanted A Policy. Wm. Hard. 

14:340-1; Apr 20 '18; The President and the Farmers. 

20:175-6; To Bring Prices Down. L. K. Frank. 

QUARTERLY JOURNAL OF ECONOMICS. Harvard 
I'niv. Press, Cambridge, Mass. 75c. 

31:656-73; Aug '17; Study of Mitchell's Inquiries into Prices, 
B. W. King. 

32:66-100; Nov. '17; Concept of Normal Price in Value and 
Distrilnition. F. H. Knight. 

.32:597-620; Aug '18; Price-Fixing in Iron and Steel Indust- 
ries. A. Berglund. 

32:567-92; Sugar Prices and Distribution under Food Con- 
trol. R. G. Blakely. 

33:1-70; Nov '18; Wheat and Flour Trade under Food Ad- 
ministration. W. Eldred. 

33:71-106; Nov '18; Price-fixing of Copper. L. K. Morse. 

33 :205-61 ; Feb '19 ; Price-Fixing as Seen by a Price-fixer. 
F. W. Taussig. 

33:560; May '19; Cost of Production and Price. P. G. Wright. 

34:138-60; Nov '19; Price-fixing and Theory of Profits. K. 
Simpson. 

34:432; May '20; Price; Prices and Currency in Japan. V. 
S. Clark. 

THE REVIEW. 140 Nassau St. N. Y. 15c. 

1:606-7; Nov 22 '19; The Financial Situation. Geo. E. 
kiil)erts. 

1:659-61; Dec. 13 '19; What Makes High Prices? Comments 
mi the Above. 

2:194; Feb 28 '20; Profiteer Hunting and Political Economy. 

2:243; Mar 13 '20; Fighting the Symptoms. 

2:306; Mar 27 '20; Theory of Purcliasing Power. J. L. 
Laughlin. 

2:466; May 1 '20; On Profiteer Hunting. H. Hazlitt. 



no THE UNIVERSITY OF OKLAHOMA 

2:5(i0; May 29 '20; Wave of Price Slashing. 

REVJEW OF REVIEWS. 30 Irving Place, N. Y. 35c. 

54:199-210; Aug '16; Skyward Career of all Prices. J. G. 
Fredrick. 

56:289-92; Sep '17; Government Price Regulation. E. A. 
Seligman. 

59:595-8; Jun '19; Are Prices Coining Down? Irving Fisher. 

61 :93-4 ; Jan '20 ; Price-fixing as a remedy for Profiteering. 

SATURDAY EVENING POST, Curtis Puh. Co., Philadel- 
phia, Pa. 5c. 

64:18; Jan 20 '20; Palmer's Panacea. 

192:5 Mar. 20 '20; Finding the Profiteers. A. W. Atwood. 

190:18; Apr 3 '20; Branding the Profiteer. A. W. .\twood. 

SCRIBNER'S. Chas. Scribner's Sons, 597. Fifth Ave. N. Y. 
35c. 

68:130; July '20; What Stopt the Rise in Prices? A. D. Noyes. 

64:8-6; Jul '18; The Farmer and Three Dollar Wheat. C. M. 
Harger. 

64:581-6; Nov '18; Regulation of Food Prices. J. L. Payne. 

62:259-60; Aug '17; War Finance and War Prices. A. D. 
Noyes. 

THE SURVEY. Survey Associates, 112. E 19, N. Y. 25c. 

41 :840 ; Mar 8 '19 ; Prices that are Fair and Reasonable. 

THE OUTLOOK. 381, Fourth Ave, N. Y. 15c. 

115:1484; Jan 24 '17; Prices and Prosperity; Some Rudiment- 
ary Economics. T. H. Price. 

118:531; Apr 3 '18; What a Farm Woman Thinks of High 
Price Fixing. H. C. Bennett. 

119:341-2; Jun ."6 '18: The Farmer's Sad Lot. W. 1. Chaml)er- 
lain. 

THE OVERLAN-D. 259 Minna St. San Francisco. Calif. 15c. 

N. S. 68:337-40; Oct '16; High Prices-Causes and Remedies. 
O. C. Bellman. 

N. S. 68:420-4; Nov '16; Bad Name. E. R. Johnson. 

THE UNPARTIZAN REVIEW. Henry Holt & Co. N. Y. 
75c. 

(Formerly the Unpopular Review.) 

July '20; 43; The High Cost of Living. Alexander Noyes. 



INDEX 



Antitrust Laws 23 

Arguments for Price Control 13 

A*wood, Albert J. Zl 

I'ibliography 

Briefs 69 

Capper, Sen. Arthur 52 

Cause of Mounting Prices 31 

Control by Indictment 35 

Control by Laws of Supply & Demand & Competition 22 

Control of Public Utilities 26 

Cooperation to Control the Markets ?4 

Costs of Marketing 5 

Continuation of Regulation after the War 36 

Dissolution of Trusts, Little aid from 30 

Douglas Harry C. 47 

Enormous Excess Profits Z?) 

Evils of Both Rising and Falling Prices 64 

Exchange, The 65 

Federal Trade Commission 28 

Failure of the Law of Supply and Demand 32 

Finding the Profiteer 'hi 

Fisher, Prof. Irving 64 

Foreword 2 

Government as a Distributor of Goods 20 

Jail the Profiteers 52 

Keeping down Food Costs 47 

Legislation to Control Trusts 25 

Xot so Simple as it Seems 39 

Objections to Price Control 16 

Price Control 3 

Price Control in Australia 47 

Price Fixing in Other Days 51 

Pure Food Laws 27 

Questions to Aid Study 

Quotations, A Few 67 

Robb, Dr. T. B. i 3 

Restriction of Output 21 

Technical Difficulties of Price Control 19 

What Happens in the Dark 57 

When will Prices Drop 50 

Van Hise, Charles H 22 



LIBRARY OF CONGRESS 




013 741 415 6 
DEBATE BULLETINS 

These are collections of facts and arguments on both 
sides of public questions. While care is taken to secure ac- 
curacy in statement of facts no effort is made to test the sound- 
ness of arguments; they are simply arguments which are used. 
The debater himself needs the discipline of testing arguments. 
The purpose of the bulletins is solely toaid debaters in the study 
of current questions by furnishing materials more or less in- 
accessible to them. This bulletin is the eighteenth of the 
series. 
Extension 

Number 12. A Student's Manual of Debating and Parliamen- 
tary Practise. 10c. This is a reprint with a few changes 
of three bulletins of the University of Wisconsin. 
Number 13. The Initiative and Referendum. (Out) 
Number 15. The Unicameral Legislature. 72 pp. 
Number 16. Bank Guaranty. (Out) 
Number 17. Woman Suffrage. (Out) 
Number 18. Consolidation of Rural Schools. Z2 pp. 
Number 20. Preferential Ballot. 56 pp. 
Number 21. Government Ownership of Railways. 116 pp. 
Number 22. The Single Tax. 162 pp. 
Number 24. Workmen's Compensation. 132 pp. 
Number 26. Selling Munitions of War. 64 pp. 
Number 28. Continuing the Monroe Doctrine. 148 pp. 
Number 30. Teachers' Pensions. 52 pp. 
Number 34. Compulsory Arbitration of Labor Disputes. 
Number 40^. Woman Suffrage No. 2. 80 pp. 
Number 43. The City Manager Plan. 84 pp. 
Number 47. Government Control of Railways. Supplemen- 
tary to Number 21. 
Number Compulsory Military Training, pp. 

All these bulletins except No. 12 are furnisht free to all 
citizens of the state. Address UNIVERSITY EXTENSION, 
Dept. Public Discussion and Debate, Norman, Okla. 

University of Oklahoma Bulletin, published by the univer- 
sity, is issued semi-monthly. Entered at the postofnce at Nor- 
man, as second class matter, under act of congress of August 
24, 1912. Accepted for mailing at special rate of postage, as 
provided for in Section 1103, act of October 3rd, 1917, authoriz- 
ed on July 8th, 1918. 



THE UNIVERSITY PRESS 



